CORPORATE PRESENTATION - Millenniumbcp · presentation are cautioned not to place undue reliance on...
Transcript of CORPORATE PRESENTATION - Millenniumbcp · presentation are cautioned not to place undue reliance on...
CORPORATE
PRESENTATION
OCTOBER 2018
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Disclaimer
This document is not an offer of securities for sale in the United States, Canada, Australia, Japan or any other jurisdiction. Securities
may not be offered or sold in the United States unless they are registered pursuant to the US Securities Act of 1933 or are exempt
from such registration. Any public offering of securities in the United States, Canada, Australia or Japan would be made by means of a
prospectus that will contain detailed information about the company and management, including financial statements
The matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties. By their
nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of BCP to be
materially different from future results, performance or achievements expressed or implied by such forward looking statements. Many
of these risks and uncertainties relate to factors that are beyond BCP's ability to control or estimate precisely, such as future market
conditions, currency fluctuations, the behavior of other market participants, the actions of regulators and other factors such as BCP's
ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which
BCP operates or in economic or technological trends or conditions, including inflation and consumer confidence. Attendees at this
presentation are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this
presentation. Even if BCP’s financial condition, business strategy, plans and objectives of management for future operations are
consistent with the forward-looking statements contained in this presentation, those results or developments, as well as BCP past
performance, may not be indicative of results or developments in future periods. BCP expressly disclaims any obligation or
undertaking to release any updates or revisions to these forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law
The information in this presentation has been prepared under the scope of the International Financial Reporting Standards (‘IFRS’) of
BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002
First 6 months figures for 2018 and 2017 not audited
The information in this document is provided solely for information purposes. It must be understood as being in accordance with the
remaining information publicly disclosed by Group BCP.
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Agenda
Macro and Business Overview
Performance 2013-2018
Strategic Plan 2018-2021
1H 2018 earnings
Other information
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Key highlights
• Successful fiscal consolidation in the last years in Portugal: State budget deficit at
0.9%* in 2017, with a surplus forecasted for as early as 2021.
• Following the 2011-2013 recession, economic activity is now strong, with GDP up by
2.7% in 2017 (2.1% in 1Q18) from 1.6% in 2016
• Unemployment decreased significantly from its peak, and now stands at 7.4% (8.9%
full year 2017 figures)
• The current account has turned positive (0.6% surplus in 2017), following ≈10%
deficits for most of the decade up to 2010
• The real estate market has also recovered
• Concentrated banking system (top 5 banks account for ≈80% of total market), with
comfortable liquidity and capital position, together with a lower, although still
elevated, weight of non-performing loans
• Largest private sector bank in Portugal, with an unique international position,
diversified shareholder structure and a clear governance model
1
2
3
*3%, including the impact from recapitalisation of CGD
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96.2 111.4
126.2 129.0 130.6 128.8 129.9 125.7
2010 2011 2012 2013 2014 2015 2016 2017
51.8 50.0
48.5 49.9
51.8
48.2
44.9 45.9
2010 2011 2012 2013 2014 2015 2016 2017
0
2
4
6
8
10
12
14
16
18
2004 2006 2008 2010 2012 2014 2016 2018
Fiscal consolidation creates the conditions for the sustainability of the
public debt, leading to normalisation of yields on sovereign debt
Average >10%
Average≈4%
<2%
10y Portuguese bonds (yield, %)
Yields have decreased
…with significant effort on expenditure Budget deficit decreases…
(% of GDP) (total expenditure, % of GDP)
(Public debt, % of GDP)
Debt level is expected to decrease
Source: Bank of Portugal; Ministry of Finance.
Source: Statistics Portugal for 2010-17
Source: Thomson Reuters.
0.9
11.2
7.4
5.7 4.8
7.2
4.4
2.0 3.0
2010 2011 2012 2013 2014 2015 2016 2017E
Including
recapitalisation
of CGD
Source: Statistics Portugal
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+1.9
-1.8
-4.0
-1.1
+0.9 +1.8 +1.9
+2.8
2010 2011 2012 2013 2014 2015 2016 2017
10.8 12.7
15.6 16.2
13.9 12.4
11.1 8.9
2010 2011 2012 2013 2014 2015 2016 2017
-10.2
-6.0 -2.2
+1.5 +0.2 +0.3 +0.6 +0.6
2010 2011 2012 2013 2014 2015 2016 2017
Portugal has been undergoing profound structural reforms, which are
already showing positive results
Real GDP growth rate (yoy) Current account balance (% of GDP)
Unemployment rate (%)
Source: Statistics Portugal (INE); Ministry of Finance. Source: Statistics Portugal; Ministry of Finance.
Source: Statistics Portugal (INE); Ministry of Finance.
Budget deficit at 0.9% in 2017 (excluding recapitalisation of
CGD), down from 11.2% in 2010, mainly on the back of
lower levels of expenditure as a percentage of GDP
GDP up by 2.8% in 2017 from 1.9% in 2016, following the
2011-2013 recession
Unemployment has decreased significantly and continuously
from a 16.2% peak in 2013, standing at 8.9% in 2017
Following ≈10% deficits for most of the decade up to 2010,
the current account has turned positive from 2013 (0.6%
surplus in 2017)
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Housing prices and bank appraisals are recovering
Source: Eurostat.
Housing bank appraisals House price index (HPI) (€ /m2) (HPI base 100=2015)
Property prices (2010=100)
85
95
105
115
125
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
Total Existing New
800
900
1000
1100
1200
1300
1400
1500
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Jun-1
2
Dec-1
2
Jun-1
3
Dec-1
3
Jun-1
4
Dec-1
4
Jun-1
5
Dec-1
5
Jun-1
6
Dec-1
6
Jun-1
7
Dec-1
7
Jun-1
8
Portugal Lisbon Area
Source: Statistics Portugal. Source: Statistics Portugal.
The House Price Index increased 11.2% in 2Q18 when compared
to 2Q17, with existing dwellings recording an average increase
in excess of new dwellings (+12.6% vs. +6.3%, respectively)
The average value of housing bank appraisals in Portugal stood
at €1,196 per square meter in Aug 18, up 6.6% y-o-y (+7.9% to
€1,468 in the Lisbon area)
Property prices were relatively stable in Portugal since 2000,
comparing to a volatile property market in neighboring Spain
The housing costs accounted for 17.7% of disposable household
income in Portugal, compared to 22.0% for the Eurozone as a
whole (latest available data: 2016)
0
50
100
150
200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Spain 129
Portugal 92
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Portuguese financial system market shares
Branches
24% 18% 16%
11% 11%
Bank 1 Millenniumbcp
Bank 3 Bank 4 Bank 5
Gross loans + Customers funds
34%
19% 15%
5% 3%
Millenniumbcp
Bank 2 Bank 3 Bank 4 Bank 5
15% 15% 15% 13% 11%
Bank 1 Bank 2 Bank 3 Millenniumbcp
Bank 5
Core net income*
(December 2017) (December 2017)
(December 2017)
* Core net income = net interest income + net fees and commission income – operating costs
Concentrated Portuguese banking market: TOP 5
banks represent 80% of the market share in terms of
business volumes
BCP, the largest private sector bank in Portugal in
terms of business volumes, generates 34% of the
system core net income
BCP is the most efficient bank in Portugal with only
13% of the system branch network
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Portuguese financial system
17.5% 17.2% 13.3% 12.7%
2015 2016 2017 Mar 18
NPEs (Non-performing exposures) NPE coverage
LTD (Loans-to-deposits ratio) CET1 ratio
40.8% 45.3% 49.3% 52.2%
2015 2016 2017 Mar 18
12.2% 11.3% 12.4% 11.4% 13.9% 13.6%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18
111.8% 102.1% 96.1% 95.5% 92.5% 92.5%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18
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Building the leading private sector bank in Portugal and a
relevant player in selected markets
… to leadership in Portugal and to international
presence through growth in selected affinity retail markets
From foundation…
Incorporation
and organic
growth to
become
relevant player
Consolidation to
reach critical
mass
Leadership in
Portugal, setting
the foundations
for expansion in
Poland and
Greece
Partnership
with Ageas
for insurance
business
Consolidation
of international
expansion
with a single
brand
Focus on
Portugal and on
affinity markets
Reference bank
in Portugal
Portugal -
Poland –
Mozambique –
Angola (since
2016 with a
partnership with
BPA)
Leading bank in
Portugal and
strong position
in Poland and
Mozambique
Business model
transformation
to adapt to new
customer needs 1985-1995
1995-2000
2000-2005
2005–2012
2012–2017
2017- …
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Leading position in most products and financial services in Portugal.
Millennium bcp ranks second in terms of loans market share (17%) and customer deposits market
share (17%), after state-owned Caixa Geral de Depósitos.
A listed bank in Portugal
The largest private sector bank in Portugal
• Main business lines directed to retail
and commercial banking, investment
banking, corporate and private
banking/asset management
• Strong focus on innovation and on
Customer experience
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Unique international presence focused on key strategic
markets
Representation office
2 employees
Single brand
Millennium
Market share: 26.8% on loans, 27.2% on deposits
Loans to Customers (gross): €915 million
Customer funds: €1,517 million
Employees: 2,483
Branches: 190
BCP shareholding: 66.7%
Mozambique
Angola
Market share: 4.4% on loans, 5.1% on deposits
Loans to Customers (gross): €11,924 million
Customers funds: €15,835 million
Employees: 5,846
Branches: 359
BCP shareholding: 50.1%
Poland
On-shore branch
Loans to Customers (gross): €411 million
Customer funds: €632million
Employees: 12
Branches: 1
Macao
China (Guangzhou)
Market share: 17.3% on loans, 17.6% on deposits
Loans to Customers (gross): €37,350 million
Customer funds: €53,049 million
Employees: 7,151
Branches: 573
Portugal
Loans market share: >11%
Deposits market share: >12%
Employees: >1,800
Branches: 140
BCP shareholding: 22.5%
De-consolidated from June 2016
Leading
Private Sector Bank
Retail focus
Stable position
Market know-how
Solid partnership
Since 1993
On-shore branch
Market leader
Key innovator
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Diversified shareholder base, geographically scattered
Number of Shareholders
Shareholder structure
Per geography
(Last information available)
Fosun 27%
Sonangol 20%
EDP 2%
PT retail 24%
PT institutionals 4%
Non-PT retail 1%
Non-PT institutionals 22%
170.9 164.1
Dec10 Jun 18
(x1000) (Last information available)
3
China 27.1%
Outros 11.0%
UK/US 11.5%
Africa 19.6%
Portugal 30.8%
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One-tier management and supervisory model, composed by a
Board of Directors 3
General Meeting of Shareholders
Board for International Strategy
Remuneration and Welfare Board
Statutory Auditor (ROC)
Audit Committee
Executive Committee Company Secretary
Board of Directors
Commissions and Sub-Commissions
Costs and Investments Commission
Costs and Investments Sub-Commission
CALCO
Human Resources Commission
Compliance Commission
Quality, Security and Data Protection Commission
Companies & Investment Banking Commission
Retail Commission
Project Mobilizar Commission
Work Relations Commission
• Committee for Nominations and Remunerations • Committee for Corporate Governance, Ethics and Professional Conduct • Committee for Risk Assessment
Client Ombudsman
Credit Commission
Risk Commission
Monitoring and Validation of Models Sub-Commission
NPA Monitoring Commission
Internal Control and Operational Risk Monitoring Commission
Pensions Funds Risk Monitoring Commission
16 Commissions and Sub-Commissions
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Agenda
Macro and Business Overview
Performance 2013-2018
Strategic Plan 2018-2021
1H 2018 earnings
Other information
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Key highlights
*Core income = net interest income + net fees and commission income.
**By loan-loss reserves, expected loss gap and collaterals.
• Profitable operation with a recurring capacity to generate operating results > €1.1 billion per
annum
Net interest benefits from continuing reduction in cost of funding: NIM of 2.2% in 1H18
(Portugal:1.8%, up from 0.6% in 2013)
Consistent track record of delivering reduction in operating costs: cost to core-income of
49%*, vs Eurozone’s 71%. Largest operating restructuring in Portugal, with operating costs
down by 40% from 2011 (pre-programme)
• Focused NPE management through a dedicated recovery strategy in Portugal: NPE reduction of
€6.9bn from €12.8bn at year-end 2013 to €5.9bn at June 30, 2018. Increased coverage by
provisions to 48% (50% for the Group) from 23% in 2013. Total coverage** of 106% at June 30, 2018
• Resilient international recurring earnings contribution of €89.9mn in 1H18
• Sustainable funding strategy: loans to deposits ratio at 88% as of June 30, 2018. ECB funding at
€3.1 billion as of the same date, down from a maximum of €12.4 billion at year-end 2011
• Enhanced capital position: fully implemented CET1 ratio of 11.7%, compared to minimum
required phased-in CET1 (SREP) of 8.81% for 2018; fully implemented total capital ratio of 13.3%
(SREP requirement: 12.31%)
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2
3
4
5
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Net interest income to benefit from continuing reduction in
cost of funding 1
-239 -173
-123 -83 -69 -58
2013 2014 2015 2016 2017 1H18
Net Interest Income
... leading to a decrease in total funding
costs
NII to improve, as cost of time deposits keeps
decreasing ...
(€ mn)
(Interest expenses divided by Interest-bearing liabilities) (Portugal, spread on TDs book vs 3m Euribor, bps)
141 208 329 358 390 385
808
343
527
711 736
2013 2014 2015 2016 2017 1H18
2.41% 1.92%
1.21% 0.78% 0.44% 0.38%
2013 2014 2015 2016 2017 1H18
NIM
1.8%
0.6%
1.0%
1.5% 1.6% 1.8%
2013 2014 2015 2016 2017 1H18
1H
Front book:
-46bp
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Consistent track record of delivering reduction in
operating costs 1
9,959 8,584 7,795 7,459 7,333 7,189 7,151
2011 2013 2014 2015 2016 2017 Jun 18
* Excluding non-usual items in 2016: impact from revision of collective labour agreement net of restructuring costs.
885 774 695 671 618 578 573
2011 2013 2014 2015 2016 2017 Jun 18
423 353 351 320 310 271 313
588
1,039
853
690 644 624
2011 2013 2014 2015 2016 2017 1H18
...with a >30% reduction in branches...
Operating costs down by 40% vs 2011 (pre-
programme) ...
Branches (#)
Employees (#)
... and >25% reduction in employees
Operating costs (€ mn)
*
1H
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1
Pre-provision profit
Millennium bcp: one of the most efficient banks in the
Eurozone
47% sem itens
não habituais
Cost to core income* Latest available information
vs. peers in
Portugal
vs. Euro-zone
banks
Cost to core income*
*Core income = net interest income + net fees and commission income.
178
599 556
474
1,243
2013 2017 1H18
Banco 1
Banco 2
Banco 3
Banco 4
54%
74%
65%
49%
58%
49%
71%
78%
98%
77%
60%
49%
86%
49%
2013 1H18
-37pp
80% 71% -9pp
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Asset quality metrics to benefit further from continued focus
on NPE reduction
2
743 1,021 730 1,045
Cost of risk and loan-loss charges
Impairment
charges (€mn)
Cost of risk
(basis points)
-1.5p.a.
NPEs (EBA definition) (€ bn)
Other
NPLs>90d
(Basis points)
Continued decrease of NPEs over the last 4.5 years at a
pace of €1.5bn per year as a result of a stabilisation of the
macro environment and the measures implemented
Reduction of almost €6.9bn from Dec 13 to Jun 18
Cost of risk at 103bps in 1H18 with NPE coverage by
provision at 48% and total coverage* at 106% by Jun 18
NPEs net from loan-loss reserves were down to €3.1 billion
as at June 30, 2018 from €9.8 billion at year-end 2013
Cost of risk at 88 bps and NPE coverage by provision at 50%,
at a Group level
533
* Coverage by LLRs, collateral and expected loss gap.
157
233 175
266
140 103
2013 2014 2015 2016 2017 1H18
192
NPE coverage
23% 28%
31%
39% 42%
48%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
Total
coverage* 101.4% 105.6% 90.3% 92.6% 106.3%
Coverage by
LLRs
86.0%
6.2 6.1 5.6 5.0 4.1 3.6
12.8 10.9
9.8 8.5
6.8 5.9
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
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Strong coverage levels
Individuals 26%
Companies 74%
NPLs >90d 59%
Other NPEs 41%
2
(June 2018)
NPE breakdown Total NPEs: €5.9bn
*By loan-loss reserves, expected loss gap and collaterals.
NPE total coverage*
Other NPE total coverage* NPL >90d total coverage*
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
24%
56% 48% 3%
20% 15%
69%
34% 44%
97% 110% 106%
Individuals Companies Total
12%
47% 38% 4%
15% 12%
80%
46% 54%
96% 108% 105%
Individuals Companies Total
32%
62% 54% 2%
23% 17% 63%
26% 36%
97% 111% 107%
Individuals Companies Total
(June 2018)
(June 2018) (June 2018)
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Diversified and coherent international exposure delivering resilient
contribution 3
Key international operations Contribution to consolidated results*
* Comparable, assuming shareholding in Bank Millennium (Poland) constant at 50.1% and excluding discontinued operations
(€ mn)
Market share: 4.4% on loans, 5.1% on deposits
Loans to Customers (gross): €11,924 million
Customers funds: €15,835 million
Employees: 5,846
Branches: 359
BCP shareholding: 50.1%
Poland
Angola
Loans market share: >11%
Deposits market share: >12%
Employees: >1,800
Branches: 140
BCP shareholding: 22.5%
De-consolidated from June 2016
Market share: 26.8% on loans, 27.2% on
deposits
Loans to Customers (gross): €915 million
Customer funds: €1,517 million
Employees: 2,483
Branches: 190
BCP shareholding: 66.7%
Mozambique
159
178 170 173 175
90
2013 2014 2015 2016 2017 1H18
1H
Full year
** Excluding IAS 29 impact for the Angola operation in the amount of €28.4 million
**
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Balance Sheet
Sovereign debt portfolio
Securities portfolio (€ bn)
(Billion euros) Debt issued
Balance sheet breakdown (€ bn)
Equity
MM (net) Debt issued
Other (net)
Loans
Securities
Other
Sovereign
debt
(Billion euros)
7.3
11.6
4.8
2.6 12.1
14.2
Dec 11 Jun 18
Deposits
Dec 11 Jun 18
Portugal 4.7 5.9
T-bills 1.7 0.7
Bonds 3.0 5.2
Poland 0.8 3.9
Mozambique 0.3 0.6
Other 1.5 1.1
Total 7.3 11.6
Dec 11 Jun 18
Debt securities 16.2 2.6
MTN 7.6 0.2
Bonds + Certificates 4.1 1.1
Covered bonds 3.3 1.0
Securitisation 1.2 0.3
Subordinated debt 1.1 1.2
Loan Agreements 1.2 1.7
Total 18.5 5.4
4
68.0
47.5 46.9 53.5
12.1
12.9 14.2
3.2
18.5 6.7
5.4
4.4
6.9
1 2 3 4 5Dec 11 Jun 18
2.0
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Stronger funding and liquidity 4
Net loans Deposits
(€ bn)
Commercial gap (net loans – deposits)
Important deleveraging process: -31% loans
+12% deposits which account for 88% of funding
compared to 62% in 2011
Loans to deposit ratio at 88% versus 143% in 2011
Foreign operations self funded
(€ bn)
143% 88% Loans to deposits ratio
20.5 13.2 7.8 3.9 0.4
-0.8 -3.6 -6.6
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17 Jun18
(€ bn)
68.0 62.6 56.8 53.7 52.0 48.0 47.6 46.9
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Jun18
47.5 49.4 49.0 49.8 51.5 48.8 51.2 53.5
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17 Jun18
-31% +12%
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Credit and deposits 4
Credit Performing portfolio
34.5
32.9
31.8
30.8 31.2 31.4
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
• The performing portfolio increased in Portugal by
approximately €200 million from year-end 2017
• Increasing trend in Customer deposits, with the
decrease of term deposits (due to historically low
yields) to be compensated by expanding demand
deposits
Customer deposits
9.0 10.1 12.9 14.1 16.4 18.3
24.9 24.3 21.9 19.9 18.9 19.2
33.9 34.4 34.8 34.0 35.3 37.5
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
On-demand
deposits
Term
deposits
(€ bn) (€ bn)
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Continued reduction of ECB funding 4
ECB funding
(€ bn)
Net usage of ECB funding at €3.1 billion, compared to
€12.4 billion at December 31, 2011
€15.6 billion (net of haircut) of eligible assets available
for refinancing operations with ECB, of which €4.6
billion are related to Portuguese sovereign debt, with a
€12.5 billion buffer
Future debt repayments (medium-long term)
significantly lower than in the past
Compliance with relevant liquidity ratios
Liquidity ratios (CRD IV/CRR)
129%
176%
NSFR (Net stablefunding ratio)
LCR (Liquiditycoverage ratio)
Buffer
ECB
funding
Total
collateral
(€ bn)
Outstanding debt repayments (medium-long term)
Already repaid To be repaid
0.1 0.4
2.3 2.3
0.2
4.9
Average2011-2016
2017 1H18 2018 2019 >2019
12.4 10.5 10.0 6.6 5.3 4.4 3.0 3.1
15.7
22.3 19.9
14.2 13.9 12.1 12.8 15.6
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17 Jun 18
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Enhanced capital position 5
Minimum capital requirements (SREP)
Capital ratio* (Million euros)
-724 -107 -108
5,802
4,863
Equity DTAs EL gap Other CET1fully imp.
From equity to CET1 capital*
11.7% CET1 ratio
fully imp.
6.4%
9.3% 11.1% 11.9% 11.7%
Dec09 Dec11 Dec16** Dec17 Jun18
CT1 ratio, BoP definition CET1 ratio, fully implemented, CRDIV/CRR
Pillar 1Conservation
buffer
Counter-
cyclical
buffer
Other syst.
important
institutions
buffer
Pillar 2
requirements
(P2R)
Total
require
-ments
Jun 18
CET1 4.50% 1.875% 0.00% 0.1875% 2.25% 8.81% 11.7%
Total capital 8.00% 1.875% 0.00% 0.1875% 2.25% 12.31% 13.3%
*Estimates including earnings for the first half. **Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of
CoCos repayment, both completed in February 2017.
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3.7% 4.5%
5.7% 6.3% 6.4%
FR DE ES IT
Capital at comfortable levels, strong leverage ratios
5.7% 6.4%
Jun 17 Jun 18
93.2%
74.4%
Jun 17 Jun 18
26% 25%
43% 42%
57%
FR DE ES IT
Fully implemented
*Texas ratio = NPE / (Tangible equity + loan-loss reserves).
Leverage ratio
Texas ratio*
Leverage ratio
Fully implemented, latest available data
RWA density RWAs as % of assets, latest available data
5
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Agenda
Macro and Business Overview
Performance 2013-2018
Strategic Plan 2018-2021
1H 2018 earnings
Other information
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Five strategic priorities to launch a new growth cycle
Talent
Mobilization
Business model
sustainability
Mobile-centric
digitization Growth in
international
footprint
Growth and
leadership in Portugal
1
2
3
4
5
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Talent Mobilization
Priorities going forward Strengths
Engagement and commitment
Engagement of the entire organization to proactively pursue new
vision and strategy
Rewards for success
Alignment of compensation with performance and strategic
objectives for all teams
Preparation for the future
Development of capabilities to assume new roles and use of
external hiring where necessary, with clear focus on productivity
and efficiency
Merit-based growth
Access to development opportunities and knowledge for all
employees
• Workforce talent as a
sustained advantage in
the market
• Overall increase in
satisfaction
• Employees proud to
work at Millennium
• Employees currently
satisfied with teams
and their direct
supervisors
New ways of working
Empowerment and simplification of decision making with wider
collaboration and teamwork across the bank
1
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Mobile-centric digitization
Mobile expanding day-to-day capabilities, with
interactions anytime, anywhere
Transform top customer journeys, with advanced
analytics modelling
Omni channel model including mobile and remote
services complemented by an efficient physical
network for comfort and convenience, addressing
complex needs and personal advice
Transform operations through NextGen levers to
scale up automation of low value added tasks
Weight of digital sales
3x
Time dedicated by
branches to complex
needs
+20%
share of affluent
customers with remote
advisory
3x
Increase in
branch efficiency
(sales per FTE)
+15% Expand (democratize) personalized solutions
Ambition for 2021 vs 2017 Main initiatives/levers
Cost reduction in
central services
>10%
2
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Growth and leadership in Portugal
Maximize potential of unique position as the largest private Portuguese bank
Main initiatives/levers Ambition for 2021 vs 2017
Simplicity and
convenience in
customer
financing
Strengthen market share in
high growth segments
(consumer lending, affluent and
small business)
Strength mortgage position
redesigning customer journey
and expanding distribution
reach
+470 M€ Consumer lending new business
+4pp Market share in non-auto consumer lending
+3pp Market share in mortgage new business
+1.2 Bn€ Mortgage new business
+51 k New affluent customers
+9pp Share off-balance assets
Innovate the way the
customers save and invest
~+100 M€
Banking income
3
Become the
preferred partner
for sound small
businesses
Reinforce
preeminence in
corporate
Optimize mid-corporate
portfolio exploiting value
chain financing
Capture the full potential of
the value proposition of
ActivoBank
+1.1 Bn€ Lending to small business
+1.2 Bn€ Lending to mid-corporate
2x ActivoBank Customers
Accelerate the credit
decision process, adopting
"pre-approved" facilities
and increasing automated
approvals in digital
channels
~+100 M€
Banking income
+
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Growth in international footprint
Capitalize on opportunities in high growth markets where we have competitive
advantages
Expand Customer base in
Poland, capturing full
potential of relationships
Strengthen local
relationships and risk
control in Angola
Support business sectors
across geographies in
commercial relationships
with China
Reinforce growth of
Banque Privée in
Switzerland
Pursue sustainable growth strategy in
Mozambique
>3.2 M Active customers
~200 M€ Net income
2021 aspiration for
the international
footprint
4
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Business model sustainability
Pursue low risk retail and commercial banking, innovating in credit management and
monitoring
Strong governance and management framework in place to
ensure plan is delivered
Strictly deliver on NPE plan levers
Streamline credit and risk processes to align with new lending
growth aspirations
Reinforce mechanisms to monitor new loan approvals and
ensure acceptance of sound risk profiles
NPE stock, Bn€
7.7
~3
2017 2021
~60%
NPE reduction
<50bp
Cost of risk
Ambition for 2021
Vis-à-vis 2017
Main levers
Strengthen compliance practices in Portugal and across
geographies
5
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Millennium Group’s ambitions for 2021
Consolidated
RoE
Loans to Deposits
Total active Customers
Digital customers
Cost-Income
Mobile customers
≈10%
<100%
>6 million
>60%
≈40%
>45%
≈12% CET1
Dividend payout ≈40%
NPEs stock ≈3 bn€
down by ≈60% from 2017 Asset quality
Franchise
growth
Value
creation
Cost of Risk <50 bps
5.3%
88%
4.8 million
45%
47%
26%
11.7%
--
6.7 bn€
88 bps
1H18 2021
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Investment case
1
2
4
5
Reference private sector bank in Portugal, and well-positioned in a rapidly changing landscape, following the
completion of the restructuring plan successfully implemented over the last years: one of the most efficient
banks in the Eurozone, with cost to core income ratio of 49% (Eurozone: 71%) and cost to income ratio of 47%
Profitable commercial banking business model with highly recurrent operating results, supported by a
continued track record of improvement in operating performance: PPP>€1.1 billion per annum
Profitable international operations
Strong balance sheet (fully implemented CET1 ratio at 11.7%, loans to deposits of 88%)
Strategic Plan 2021. New strategic Vision - “Partnering with our customers to create and share value” -
expected to:
• Reinforce position in core markets, enabling the expansion of active Customer base (>6mn active Clients in
2021) and a higher penetration of both digital (>60%) and mobile banking (>45%);
• Bring additional banking income in Portugal (+€200mn) and a solid contribution from international
operations (~€200mn);
• Deliver on a sustainable business model through a continuing NPE reduction (-60% to ~€3bn in 2021);
• 2021 targets of ~40% for the cost to income ratio and ~10% for return on equity
Distinct
position
Return to normalization allows Millennium bcp to focus on its core strengths
3
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Agenda
Macro and Business Overview
Performance 2013-2018
Strategic Plan 2018-2021
1H 2018 earnings
Other information
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1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
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Highlights
• Net profit of €150.6 million (€89.9 million in the 1st half of 2017),
on the back of strong earnings growth on the Portuguese activity
and increased international business activity
NPEs significantly down: -€2.1 billion from June 30, 2017 (-€1.9
billion in Portugal), -€993 million in the 1st half of 2018 (-€841
million in Portugal). Coverage by loan-loss reserves of 50%, 106%
including collaterals
• Business volumes €2.9 billion up from June 30, 2017, with total
Customers funds significantly up (+€4.1 billion)
• +103,000 active Customers in Portugal from June 30, 2017
1
2
3
4
• Improved profitability, with net earnings of €150.6
million in the 1st half of 2018
Improved credit quality, with NPEs decreasing by
€2.1 billion from June 30, 2017
• Increasing business volumes, up by €2.9 billion
from June 30, 2017
• +103,000 active Customers in Portugal from June
30, 2017
1
2
3
4
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Highlights
Improved profitability
Increasing business volumes
89.9
150.6
1H17 1H18
Improved asset quality
Growing Customer base
1 2
3 4
(Consolidated net earnings, million euros) (Non-performing exposures, billion euros)
(Consolidated, billion euros) (Active Customers Portugal, million)
+67.5%
4.6 3.6
3.3
2.4
7.8
5.9
Jun 17 Jun 18
-€1.9 billion
NPL>90d
Other NPEs
68.4 72.5
51.7 50.5
120.1 122.9
Jun 17 Jun 18
+€2.9 billion
Total Customers
funds*
Loans to Customers (gross)
0.8 0.9
2.1 2.2
Jun 17 Jun 18
+103,000 Customers
Digital Customers
NPEs Portugal
Total business
volume Active Customers
8.8 6.7 NPEs group -€2.1 billion
NPE: -2.1
Performing:
+0.9
+€4.9 billion exc. NPEs
Crescimento da base de Clientes 4
(Active Customers do Grupo, million)
2.3 2.7
5.2 5.6
Jun 17 Jun 18
+380 mil Clientes
Digital Customers
Active
Customers
*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).
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1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
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Improved profitability across geographies
*Resultado core = margem financeira + comissões – custos operacionais.
Resultado core*
534.9 117.0
260.4
396.4 437.1
558.6 526.3
1S13 1S14 1S15 1S16 1S17 1S18
Efeito positivo não
habitual de €23,7 million
(custos com pessoal)
(Million euros)
Consolidated net earnings*
Net earnings from international operations
Não incluindo ganhos de
€272 million em dívida
pública portuguesa
Net earnings from domestic activity
89.9
150.6
1H17 1H18
+67.5%
1.6
59.0
1H17 1H18
87.1 89.9
1H17 1H18
+3.1%
• Net earnings of €150.6 million in 1H18, a
67.5% increase from €89.9 million in the same
period of the previous year
• Earnings from domestic activity improved
significantly: €59.0 million in the first six months
of 2018, compared to €1.6 million in the same
period of 2017
• Earnings from international activity increased
3.1%, to € 89.9 million in the first half of 2018
from €87.1 million in the same period of 2017
*Includes earnings from domestic activity, from international operations and from discontinued operations (€1.3 million in the 1st half of
2017 and €1.8 million in the 1st half of 2018).
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Profit of €150.6 million in the 1st half of 2018
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
(million euros) 1H17 1H18 YoYImpact on
earnings
Net interest income 678.5 687.7 +1.3% +9.2
Commissions 330.3 340.2 +3.0% +9.9
Core income 1,008.8 1,027.9 +1.9% +19.0
Other income* 40.0 28.9 -27.7% -11.1
Operating costs -450.2 -500.8 +11.2% -50.6
Of which: recurring -473.9 -492.8 +4.0% -18.9
Of which: non-usual items (staff costs) 23.7 -8.0 -31.7
Operating net income 598.6 556.0 -7.1% -42.6
Impairment and provisions -415.3 -279.8 -32.6% +135.5
Net income before income tax 183.3 276.2 +50.7% +92.9
Income taxes, non-controlling interests and disc. operations -93.4 -125.5 +34.4% -32.2
Net income 89.9 150.6 +67.5% +60.7
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Net interest income driven by international operations
+19,2% sem
efeito cambial
(Million euros)
Net interest income Portugal
NIM 2.2% 2.2%
678.5 687.7
1H17 1H18
+1.3%
288.3 302.9
1H17 1H18
NIM 1.8% 1.8%
390.2 384.8
1H17 1H18
-1.4%
International operations
+5.1%
NIM 3.1% 3.1%
Consolidated
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Increased commissions
Em %
depósitos
+crédito*
0,61% 0,61%
+13,3% sem
efeito cambial
(Million euros)
225.2 234.0
1H17 1H18
Fees and commisions
105.1 106.3
1H17 1H18
+1.1%
Portugal
International operations
+3.9%
Consolidated
1H17 1H18 YoY
Banking fees and commissions 271.6 278.3 +2.5%
Cards and transfers 75.2 79.8 +6.1%
Loans and guarantees 78.5 81.4 +3.7%
Bancassurance 47.5 48.1 +1.3%
Customer account related 52.1 52.4 +0.6%
Other fees and commissions 18.2 16.6 -9.1%
Market related fees and commissions 58.8 61.9 +5.3%
Securities operations 38.2 39.5 +3.6%
Asset management 20.6 22.4 +8.4%
Total fees and commissions 330.3 340.2 +3.0%
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217|217|217 89.9 77.0
36.7 42.0
-86.6 -90.1
40.0 28.9
1H17 1H18
Other income* influenced by mandatory contributions and credit
sales
(Million euros)
Other income* Portugal
International operations
13.5 13.2
1H17 1H18
Mandatory
contributions 39.1 40.4
26.5 15.7
1H17 1H18
Consolidated
-27.7%
-40.7%
Includes -€22.4
million on credit sales
Inclui ganho na alienação de
imóvel e indemnização
seguradora (€3,1 million)
Mandatory
contributions 97.0 106.8
Mandatory
contributions 57.9 66.5
• Banking sector PT: 33.1
• European ResolFund: 21.2
• ResolFund/DGF PT: 12.2
-2.2%
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
Net trading
income
Equity earnings
+ dividends
Other operating
income
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Recurring operating costs under control, in spite of the impact from
the reversal of salary cuts
+5,3% sem
efeito cambial
(Million euros)
Operating costs
241.5 289.8
182.6
182.7
26.1
28.4 450.2
500.8
1H17 1H18
+11.2% 271.1 313.2
1H17 1H18
179.1 187.6
1H17 1H18
Portugal
International operations
+4.8%
Consolidated
+15.5%
Includes non-usual positive
impact of €23.7 million
Includes non-usual negative
impact of €8.0 million
Impact from reversal of
salary cuts: +€7.5 million
Recurring 473.9 492.8 294.8 305.2 Recurring +4.0% +3.5%
Impact from reversal of
salary cuts: +€7.5 million
*Core income = net interest income + net fees and commission income.
Staff costs
Other
administrative
costs
Depreciation
1H17 1H18
Cost to income 42.9% 47.4%
Cost to income excluding non-usual items 45.2% 46.6%
Cost to core income* 44.6% 48.7%
Cost to core income* excluding non-usual items 47.0% 47.9%
1H17 1H18
Cost to income 42.2% 49.4%
Cost to income excluding non-usual items 45.9% 48.1%
Cost to core income* 44.1% 50.6%
Cost to core income* excluding non-usual items 47.9% 49.3%
1H17 1H18
Cost to income 44.0% 44.4%
Cost to core income* 45.5% 45.9%
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Millennium bcp: one of the most efficient banks in the
Eurozone
47% sem itens
não habituais
Cost to core income*
Banco 1
Banco 2
Banco 3
Banco 4
Latest available information
vs. peers in
Portugal
vs. Euro-zone
banks
54%
74%
65%
49%
58%
49%
71%
78%
98%
77%
60%
49%
86%
49%
2013 1H18
-37pp
Cost to core income*
80% 71% -9pp
73%
47%
2013 1H18
-26pp
Cost to income
67% 68% +1pp
*Core income = net interest income + net fees and commission income.
CGD
Totta
BPI
NB
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Cost of risk keeps normalisation trend
(Million euros)
305.0
220.8
110.3
59.0
415.3
279.8
1H17 1H18
Impairment and provision charges Portugal
International operations
257.7 191.8
112.3
49.6
370.0
241.3
1H17 1H18
-34.8%
-32.6%
118bp 88bp
Loans
Cost of risk
Other
47.3 29.1
-2.0
9.4
45.3 38.5
1H17 1H18
Loans
Cost of risk
Other
Loans
Cost of risk
Other
133bp 103bp
-15.0%
Consolidated
73bp 45bp
Loan-loss
reserves 3,618 3,327
Loan-loss
reserves 3,165 2,810
Loan-loss
reserves 453 517
Inclui €4,6 million de
efeito IAS29 Angola
Inclui €10,2 million
de imparidades para
imóveis
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Relevant NPE reduction and strengthened coverage
5,040 4,032
3,721
2,633
8,761
6,665
Jun 17 Jun 18
7,816
5,913
Jun 17 Jun 18
944 752
Jun 17 Jun 18
(Million euros)
Portugal Credit quality
International operations
NPEs
NPEs
Consolidated
NPEs
NPL>90d
Other
NPE coverage by
LLRs 41% 50%
*EBA definition.
**By loan-loss reserves, expected loss gap and collaterals.
Jun 17 Jun 18
NPL>90 days ratio 9.8% 8.0%
NPE ratio* 17.0% 13.2%
NPE ratio inc. securities and off-BS* 13.0% 9.4%
NPE total coverage** 105% 106%
-24.3%
-23.9%
-2.1 billion
-1.9 billion
-20.4%
-0.2 billion
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1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
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Strong Customer acquisition
2.1
2.2
Jun 17 Jun 18
+103,000
Active Customers
(Million)
0.8
0.9
Jun 17 Jun 18
+113,000
Digital Customers
(Million)
Awards and surveys
• Clientes particulares: Banco mais próximo dos seus Clientes; Banco mais inovador; Banco eleito; Banco com os Clientes mais
satisfeitos com os canais digitais, com a qualidade do atendimento, com o gestor e com a qualidade dos produtos/serviços
(BASEF, 5 maiores bancos)
• Companies: Banco com a maior quota de mercado nas Empresas, com os Clientes mais satisfeitos, e com maior quota de
utilização e satisfação com os canais digitais; melhor Banco para as Empresas, Banco mais próximo dos Clientes, mais
inovador, com produtos mais adequados e mais eficiente (BFin 2018 DataE – 5 maiores Bancos)
• Líder nas operações de bolsa online, com forte contributo da app Bolsa e da plataforma MTRADER (prémio Best Capital
Market Initiative nos Euronext Lisbon Awards 2018)
• O Millennium investment banking foi eleito Best Investment Bank em Portugal pela Euromoney, no âmbito dos Euromoney
Awards for Excellence 2018.
+79,000 since
December 17
+55,000 since
December 17
• Bank closest to its Customers; most innovative Bank; Bank of choice; Bank with the most satisfied
Customers with digital channels, with Customer service, with Customer manager and with the quality
of products/services (BASEF, 5 largest banks in Portugal)
• Leader in online brokerage, with a strong contribution from the Bolsa app and the MTRADER platform,
winner of the Best Capital Market Initiative award at Euronext Lisbon Awards 2018
Active Customers
5.2 5.6
Jun 17 Jun 18
+380 mil
2.4 2.5
Jun 17 Jun 18
+124 mil
Grupo
Portugal
(Milhões)
(Milhões)
Digital Customers
2.3 2.7
Jun 17 Jun 18
+352 mil
0.9 1.0
Jun 17 Jun 18
+123 mil
Grupo
Portugal
(Milhões)
(Milhões)
+195 mil desde
dezembro 17
+85 mil desde
dezembro 17
+195 mil desde
dezembro 17
+85 mil desde
dezembro 17
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Strong business dynamics results in growing Customer funds
14,603 15,410
Set 16 Set 17
+5,5%
32,535 33,684
1,799 1,597 34,334 35,281
Set 16 Set 17
+2,8%
Particulares e
empresas
Outros (inc
setor público)
+3,6% sem
efeito cambial
+3,5%
(Billion euros)
Total Customers funds* in Portugal
24.2 27.9
26.4 25.6
1.6 1.2
16.2 17.8
68.4 72.5
Jun 17 Jun 18
Total Customers funds*
Demand
deposits
+5.9%
Consolidated
15.4 18.3
19.4 19.2
14.5 15.6
49.4 53.0
Jun 17 Jun 18
+7.5%
Crescimento de 4,7%
incluindo OTRVs
8.8 9.5
7.0 6.4
3.2 3.4
19.0 19.4
Jun 17 Jun 18
+2.0%
*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).
Tot. Customer funds* international operations Term
deposits
Other BS
funds
Off-BS
funds Demand
deposits
Term
deposits
Other
Demand
deposits
Term
deposits
Other
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Strong business dynamics, with increasing performing portfolio
0 0
-1,784
39,361 39,361
37,996
Dez 16 NPE Não NPE Dez 16 NPE Não NPE Dez 17
+2,0% sem
efeito cambial
(Billion euros)
Loans to Customers (gross)
24.2 23.2
3.8 3.9
23.7 23.4
51.7 50.5
Jun 17 Jun 18
Companies
Consumer
and other
Mortgage
International operations
Portugal
-2.4%
13.0 13.1
Jun 17 Jun 18
Consolidated
NPE: -23.9% (-€2.1 billion)
Performing: +2.0% (+€0.9 billion)
38.7 37.4
Jun 17 Jun 18
-3.5%
NPE: -24.3% (-€1.9 billion)
Performing: +1.8% (+€0.5 billion)
+1.1%
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Comfortable liquidity position
Amortizações de dívida (médio e longo prazos)
3.3
0.9 1.6
0.2 1.3
Média2009-2015
2016 2017 2018 >2018
Já amortizado
(Billion euros, exclui CoCos)
A amortizar
95%
88%
Jun 17 Jun 18
-7pp
(Billion euros)
3.6 3.1
Jun 17 Jun 18
15.6 12.0
129%
176%
NSFR (Net stablefunding ratio)
LCR (Liquiditycoverage ratio)
Net loans to deposits ratio ECB funding
Eligible
assets
Liquidity ratios (CRD IV/CRR)
57
209|0|93
253|217|226
191|191|191
217|217|217
1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
58
209|0|93
253|217|226
191|191|191
217|217|217
Comfortable capital position
Rácio Common Equity Tier 1
vs. bancos
zona euro
*
12.0%
13.4%
12.3%
13.0%
11.9%
Fully implemented
11.3% 11.7%
Jun 17 Jun 18
37.7 41.7
12.4% 13.3%
CET1 capital ratio of 11.6% (fully implemented
and phased-in)
Increase from a 11.3% fully implemented ratio
as of June 30, 2017 due to earnings and
improved fair value reserves, partially offset by
the impact of the IFRS9 adoption, by the
deduction of irrevocable commitments (DGF/SRF)
and by increased risk-weighted assets
The decrease from a 11.8% fully implemented
ratio as of March 31 reflects the deterioration of
public debt yields and increased risk-weighted
assets
Total capital ratios of 13.2% (fully implemented)
and 13.3% (phased-in), boosted by the €300
million subordinated debt (tier 2) issued in
December 2017
RWAs (€Bn)
Total ratio
Common Equity Tier 1 ratio*
ECB requirement
(SREP) for CET1 in
2018: 8.8%
CET1 capital ratio of 11.7% (fully implemented)
Increase from a 11.3% fully implemented ratio
as of June 30, 2017 due to organic capital
generation (+66bps on capital due to earnings
from 1st half of 2017) and improved fair value
reserves, partially offset by the impact of the
IFRS9 adoption, by the deduction of irrevocable
commitments (DGF/SRF) and by increased risk-
weighted assets
Decrease from a 11.8% fully implemented ratio
as of March 31, as organic capital generation
(+16bps on capital due to earnings for the
quarter) was offset by the deterioration of public
debt yields and by increased risk-weighted assets
Total capital ratios of 13.3% (fully
implemented), boosted by the €300 million
subordinated debt (tier 2) issued in December
2017
59
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217|217|217
3.7% 4.5%
5.7% 6.3% 6.4%
FR DE ES IT
Capital at comfortable levels, strong leverage ratios
5.7% 6.4%
Jun 17 Jun 18
93.2%
74.4%
Jun 17 Jun 18
26% 25%
43% 42%
57%
FR DE ES IT
Fully implemented
*Texas ratio = NPE / (Tangible equity + loan-loss reserves).
Leverage ratio
Texas ratio*
Leverage ratio
Fully implemented, latest available data
RWA density RWAs as % of assets, latest available data
60
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191|191|191
217|217|217
Pension fund
Assumptions of the fund unchanged from
December 31, 2017
Coverage of liabilities of 105%
Positive actuarial deviations in the 1st
half of 2018 (+€27 million), reflecting the
performance of the fund above
assumptions
Shares 13%
Bonds 35%
Real estate 8%
Cash and other 44%
Pension fund Key figures
Assumptions
(Million euros)
Dec 17 Jun 18
Pension liabilities 3,050 3,056
Pension fund 3,166 3,202
Liabilities' coverage 104% 105%
Fund's profitability +4.2% +3.1%
Actuarial differences +29 +27
Discount rate
Projected rate of return of fund assets
Mortality Tables
Men
Women
Salary growth rate
Pensions growth rate
2.10%
Dec 17
2.10%
0.25% until 2019
0.75% after 2019
0.00% until 2019
0.50% after 2019
Jun 18
2.10%
0.25% until 2019
Tv 88/90
Tv 88/90-3 years
2.10%
Tv 88/90
Tv 88/90-3 years
0.75% after 2019
0.00% until 2019
0.50% after 2019
61
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191|191|191
217|217|217
1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
62
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253|217|226
191|191|191
217|217|217
271.1 313.2
1H17 1H18
1.6
59.0
1H17 1H18
641.9 634.4
1H17 1H18
Increased net income
(Million euros)
Net earnings of €59.0 million in 1H18, + €57.5
million compared to €1.6 million in the same
period of 2017
Net earnings were driven by a significant
reduction in credit-loss charges (-25.6%, with
cost of risk decreasing to 103bp from 133bp), as
well as by lower other impairment and provisions
(-55.9%)
+57.5
Includes non-usual positive
impact of €23.7 million
Includes non-usual negative
impact of €8.0 million
Impact from reversal of
salary cuts: +€7.5 million
Net income
Operating costs
Banking income
63
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253|217|226
191|191|191
217|217|217
Net interest income
Net interest income decreased from €390.2 million in the first half of 2017 to €384.8 million in the same period
of 2018. The favourable impacts of the repayment of CoCos; of the continued decline in the remuneration of
time deposits; and of a lower wholesale funding cost were more than offset by the negative effects of the
lower volume of credit, largely reflecting the emphasis on the reduction of NPEs (unlikely to pay); of lower
interest recoveries (including IFRS9); and of the securities portfolio (increased balance yielding lower interest,
reflecting lower sovereign yields from the end of the first half of 2017)
Net interest income increased slightly from €192.0 million in the first quarter to €192.8 million in the second
quarter of 2018
-1.4%
+6.3 +8.5 +18.1
-16.1 -12.6
-9.8
+0.1 390.2 384.8
1H17 CoCorepayment
effect
Effect of costof timedeposits
Effect ofwholesale cost
Creditvolumeeffect
Effect of netrecovery of
interest
Effect ofsecuritiesportfolio
Other 1H18
1.8% 1.8% NIM
Net interest income (Million euros)
64
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253|217|226
191|191|191
217|217|217
Continued effort to reduce the cost of deposits
Continued improvement in the spread of the
portfolio of term deposits: from -0.7% in the first
half of 2017 to -0.6% in the same period of 2018;
front book for 1st half of 2018 priced at an
average spread of -46bp, still below the current
back book’s
Spread on the performing loan portfolio stood at
2.7% in the first half of 2018 (same spread as in
the first half of 2017)
NIM was 1.8%
-0.7%
-0.6%
1H17 1H182.7% 2.7%
1H17 1H18
NIM
1.8% 1.8%
1H17 1H18
Continued improvement in the spread of the
portfolio of term deposits: from -0.7% in the first
half of 2017 to -0.6% in the same period of 2018;
front book for 1st half of 2018 priced at an
average spread of -46bp, still below the current
back book’s
Spread on the performing loan portfolio stood at
2.7% in the first half of 2018 (same spread as in
the first half of 2017)
NIM was 1.8%
Spread on the book of term deposits (vs 3m Euribor)
Spread on the performing loan book (vs 3m Euribor)
65
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191|191|191
217|217|217
Commissions and other income*
(Million euros)
26.5
15.7
1H17 1H18
-40.7%
Growing commissions in Portugal, in all
lines, with income related to markets
(brokerage, in particular) and to
investment banking activity standing
out
Decreased other income due to lower
trading income (-€22.4 million in sales
of credit) and to higher mandatory
contributions (+€8.6 million)
Growing commissions in Portugal, in all lines,
with income related to markets (brokerage, in
particular) and to investment banking activity
standing out
Decreased other income due to lower trading
income (-€22.4 million in sales of credit) and to
higher mandatory contributions (+€8.6 million)
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
Fees and commissions Other income*
1H17 1H18 YoY
Banking fees and commissions 194.0 201.0 +3.6%
Cards and transfers 51.4 53.1 +3.4%
Loans and guarantees 51.7 53.5 +3.4%
Bancassurance 39.3 40.7 +3.6%
Customer account related 46.4 46.9 +0.9%
Other fees and commissions 5.2 6.9 +32.8%
Market related fees and commissions 31.2 32.9 +5.6%
Securities operations 28.0 29.6 +5.6%
Asset management 3.2 3.3 +5.0%
Total fees and commissions 225.2 234.0 +3.9%
66
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253|217|226
191|191|191
217|217|217
Operating costs
(Million euros)
145.1 187.4
109.9
107.9 16.1
17.9 271.1
313.2
1H17 1H18
Operating costs
596 573
Jun 17 Jun 18
-23
7,303 7,151
Jun 17 Jun 18
-152 Cost to core
income* 50,4% 50,3%
Cost to income 44,8% 46,0%
+15.5%
Includes non-usual positive
impact of €23.7 million
Includes non-usual negative
impact of €8.0 million
294.8 305.2 Recurring +3.5%
Impact from reversal of
salary cuts: +€7.5 million
Employees
Branches
Staff costs
Other
administrative
costs
Depreciation
67
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253|217|226
191|191|191
217|217|217
Very strong pace of NPE reduction since 2013
(Million euros)
6,213 6,134 5,572 5,029 4,058 3,561
12,783 10,921
9,777 8,538
6,754 5,913
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
NPL>90d
Other
NPEs
23% 28% 31%
39% 42%
48%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Jun 18
101.4% 105.6% 90.3% 92.6% 106.3% 86.0%
• NPEs in Portugal down to €5.9 billion as of
June 30, 2018, a €841 million reduction
from year-end 2017
• This decrease is attributable to a €497
million NPLs> 90d reduction and to a
€344 million reduction of other NPEs
• NPE total coverage* of 106%, broken down
as follows:
– coverage by loan-loss reserves of 48%
– coverage by real estate collateral of 44%
– coverage by financial collateral of 12%
– coverage by expected loss gap of 2%
• NPEs net from loan-loss reserves were
down to €3.1 billion on June 30, 2018
from € 9.8 billion at year-end 2013
*By loan-loss reserves, expected loss gap and collaterals.
Non-performing exposures (NPEs)
NPE coverage
Coverage by
LLRs
Total
coverage*
68
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191|191|191
217|217|217
Lower NPEs, with reinforced coverage
(Million euros)
4,558 3,561
3,258 2,352
7,816
5,913
Jun 17 Jun 18
-24.3%
NPL>90d
Other NPEs
257.7 191.8
1H17 1H18
133bp 103bp Cost of
risk
3,165 2,810
NPEs in Portugal down by €1.9 billion, from €7.8 billion as at June
30, 2017 to €5.9 billion as at the same date of 2018
This decrease results from net outflows of €813 million, sales of
€560 million and write-offs of €531 million
The decrease of NPEs from June 30, 2017 is attributable to a €1.0
billion reduction of NPLs>90d and to a €0.9 billion decrease of other
NPEs
Significant NPE reduction in the quarter, from €6.3 billion as at
March 31 to €5.9 billion as at June 30, 2018
Reduction of the cost of risk to 103bp in the first half of 2018 from
133bp in the same period of 2017, with a reinforcement of coverage
of the NPEs by loan-loss reserves to 48% from 40%, respectively
NPE build-up Non-performing exposures (NPEs)
Loan impairment (net of recoveries)
Loan-loss
reserves
Jun 18
vs.Jun 17
Jun 18
vs.Mar 18
Opening balance 7,816 6,282
+/- Net entries -813 -134
- Write-offs -531 -134
- Sales -560 -101
Ending balance 5,913 5,913
69
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191|191|191
217|217|217
NPE coverage
24%
56% 48% 3%
20% 15%
69%
34% 44%
97% 110% 106%
Individuals Companies Total
12%
47% 38% 4%
15% 12%
80%
46% 54%
96% 108% 105%
Individuals Companies Total
32%
62% 54% 2%
23% 17% 63%
26% 36%
97% 111% 107%
Individuals Companies Total
40% 48%
18% 15%
46% 44%
105% 106%
Jun 17 Jun 18
*By loan-loss reserves, expected loss gap and collaterals.
NPE total coverage* NPE total coverage*
Other NPE total coverage* NPL>90d total coverage*
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
LLRs
Real estate
collateral
Cash, other
fin.collat., EL gap
70
209|0|93
253|217|226
191|191|191
217|217|217
Foreclosed assets and corporate restructuring funds
(Million euros)
(Million euros)
148
224
1H17 1H18
1,629 1,448
196 216
1,825 1,664
Jun 17 Jun 18
(Million euros)
1,615 2,189
165 255
9 0
854 825
205 195
1,068 1,020
Jun 17 Jun 18
Original credit exposure: €2,006 million
Book value (30 Jun 2018): €1,020 million
Total impairment (credit+restr. funds): €986 million
(49% coverage)
-11.1% -6.6%
Valuation exceeds book value
by 26%
Foreclosed assets
Sales of foreclosed assets
Book value
Net value
Impairment
Corporate restructuring funds
# properties
sold
Sale value
Construction
RE/tourism
Industry
71
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191|191|191
217|217|217
15.4 18.3
19.4 19.2
1.5 1.1
13.0 14.4
49.4
53.0
Jun 17 Jun 18
19.4 18.2
2.0 2.0
17.3 17.1
38.7 37.4
Jun 17 Jun 18
Strong business dynamics leads to increased Customer funds and
performing credit portfolio
(Billion euros)
Loans to Customers (gross) Total Customers funds*
+7.5%
-3.5%
Demand
deposits
Term
deposits
Other BS
funds
Off-BS
funds
Companies
Consumer
and other
Mortgage
NPE: -24.3% (-€1.9 billion)
Performing: +1.8% (+€0.5 billion) Decrease from €38.0 billion in March due
to strong NPE reduction (-€369 million)
and wholesale maturities (-€350 million)
*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).
72
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191|191|191
217|217|217
Credit now growing in Portugal
(Billion euros)
Performing credit portfolio
30.9
31.4
Jun 17 Jun 18
Total Customers funds*
-5.5 -0.8 -0.1
+0.1
25.2
18.9 18.9
Dez 13 Construção,imobiliário,
SGPS não fin.
Outrossetores
Dez 17 Construção,imobiliário,
SGPS não fin.
Outrossetores
Jun 18
50.8 53.1
Jun 17 Jun 18
+1.8%
+4,5%
• Growth of the performing credit
portfolio in Portugal of 1.8% from June
30, 2017
• Strong performance of credit activity
in the first six months of 2018:
– New consumer credit increased 19.1%
compared to the first half of 2017.
Strong focus on digital, with new
remote underwriting channels (mobile
web and app) and actions targeting
Customers with pre-scoring conditions
for online credit
– Significant increase in new mortgage
lending (+72.7% compared to the first
half of 2017), with strong growth in
credit simulations on digital channels
and a new innovating service allowing
contract execution until 10:00pm and
during weekends
73
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191|191|191
217|217|217
Main bank of companies in Portugal
Results BFin 2018 DataE*, 5 largest Banks in Portugal
Used as primary
Bank
Satisfaction with
primary Bank**
Usage of net
banking
Satisfaction net
banking**
Usage and satisfaction indicators (%)
Overall best
Bank
Closest to
Customers
More
innovating
Most appropriate
products
Image indicators (%)
10
12
16
17
20
Bank 1
Bank 2
Bank 3
Bank 4 -3
11
11
16
24
15
21
25
27
27
20
35
37
46
52
Mobile:
25% (#1)
4
7
8
12
12
Bank 1
Bank 2
Bank 3
Bank 4 4
7
9
11
13
3
4
6
11
13
3
7
8
8
11
More efficient:
15% (#1)
• Millennium bcp is the main Bank of
Companies in Portugal, where it
leads with a market share of 20.2%
in all dimensions (Micro, SMEs,
MidCaps and Large Companies),
according to BFin 2018 DataE
• Millennium bcp leads in trade,
services and industry, as well as in
exporting companies, in Portugal
2020, factoring and leasing
• Most used bank for credit lines and
main choice of Companies that
intend to invest in the next 12
months
• Leadership also in digital, in the
usage of both Net Banking and
Mobile Banking, and in Customer
satisfaction regarding Net Banking
• Bank referred to as the “Overall
Best Bank for Companies”,
“Overall More Efficient”, with
“Products most appropriate to
Companies”, “More Innovating”
and “Closest to Customers”
*According to DataE, the "Business-Banking Financial Services Barometer (BFin Bancos)" is a study whose main objective is to characterize
the Portuguese banking sector from the point of view of companies, regarding banking products and services. The results of BFin 2018 are
based on a sample of more than 1,300 companies. The information was collected between April and June 2018.
**Satisfaction in Net Promoter Score (NPS) = % promoters - % detractors.
74
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253|217|226
191|191|191
217|217|217
1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
75
209|0|93
253|217|226
191|191|191
217|217|217
Increased contribution from international operations
(Million euros)
87.1 89.9
Contribution 1H17 Contribution 1H18
+3.1%
*Contribution of the Angolan operation.
**Includes goodwill impairment (-€6.6 million) and contribution revaluation (+€3.9 million).
Subsidiaries’ net income presented for 2017 at the same exchange rate as of 2018 for comparison purposes.
1H17 1H18Δ %
local currency
Δ %
eurosROE
Poland 74.3 82.3 +10.8% +11.7% 9.5%
Mozambique 41.9 51.1 +22.0% +19.4% 26.1%
Angola*
Before IAS 29 impact 10.8 8.9
IAS 29 impact** -- -2.7
Total Angola including IAS 29 impact 10.8 6.2
Other 5.6 8.4 +48.8% +42.2%
Net income 132.6 147.9 +11.6% +7.1%
Non-controlling interests Poland and Mozambique -51.0 -58.1
Exchange rate effect 5.5 --
Contribution from international operations 87.1 89.9 +3.1%
Same as above without FX effect and IAS 29 (Angola) 81.6 92.6 +13.4%
76
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191|191|191
217|217|217
Increased net income
143.8 149.6
1H17 1H18
(Million euros)
ROE 9.5% 9.5%
+4.0%
74.3 82.3
1H17 1H18
+10.8%
Net earnings of € 82.3 million (+10.8%), with ROE of 9.5%
Increasing banking income, driven by net interest income
and commissions
Customer funds up by 5.8%, while loans to Customers
increased by 15.6%, excluding FX-denominated mortgage
loans
CET1 ratio of 21.3% as of June 30, 2018
1.6 million active Customers, a 11% increase over June 30,
2017
Bank Millennium was considered the digital leader in the
Deloitte EMEA Digital Banking maturity survey 2018
297.7 313.6
1H17 1H18
+5.4%
Net earnings of € 82.3 million (+10.8%), with ROE of 9.5%
Increasing banking income, driven by net interest income and
commissions
Customer funds up by 5.8%, while loans to Customers increased by
15.6%, excluding FX-denominated loans
CET1 ratio of 21.3% as of June 30, 2018
1.6 million active Customers, a 11% increase over June 30, 2017, with
1.2 million active Digital Customers (+12%).
Bank Millennium was considered the digital leader in the Deloitte EMEA
Digital Banking maturity survey 2018
FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723. | *Pro forma data. Margin
from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest income, whereas in
accounting terms, part of this margin (€5.7 million in 2018 and €6.3 million in 2017) is presented in net trading income.
Net income
Operating costs
Banking income
77
209|0|93
253|217|226
191|191|191
217|217|217
77.8 79.7
20.8 22.7
98.6 102.3
1H17 1H18
Increased net interest income and commissions
69.8 74.8
74.0 74.8
143.8 149.6
1H17 1H18
+4.0%
360 359
Jun 17 Jun 18
199.0 211.3
1H17 1H18
+6.2%
(Million euros)
+3.8%
NIM 2.5% 2.5% Cost to income 46.5% 46.4%
+2.4%
+7.2%
+1.0%
5,865 5,846
Jun 17 Jun 18
-19 -1
*Pro forma data. Margin from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest
income, whereas in accounting terms, part of this margin (€5.7 million in 2018 and €6.3 million in 2017) is presented in net trading income.
FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723.
Net interest income*
Commissions and other income
Operating costs
Branches Employees
Staff costs
Other
Commissions
Other
Does not include tax on
assets and contribution to
resolution fund
78
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253|217|226
191|191|191
217|217|217
28.9 26.8
1H17 1H18
Credit quality
(Million euros)
NPL>90d accounted for 2.7% of total credit as of
June 30, 2018 (same percentage as of June 30,
2017)
Provision coverage of NPL>90d of 133% (109% as
of June 30, 2017)
Decrease in the cost of risk to 47bp (52bp in the
first half of 2017)
Credit ratio Jun 17 Jun 18
NPL>90d 2.7% 2.7%
Coverage ratio Jun 17 Jun 18
NPL>90d 109% 133%
332.3 430.3
Jun 17 Jun 18
Cost of risk
52bp 47bp
-7.3%
305.8 323.1
Jun 17 Jun 18
FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723.
NPL>90d
Loan impairment (net of recoveries)
Loan-loss reserves
79
209|0|93
253|217|226
191|191|191
217|217|217
7,222 8,277
5,812 5,407
98 93 1,834
2,058
14,966 15,835
Jun 17 Jun 18
Growing volumes
3,515 3,920
1,501 1,715
3,770 3,392
2,367 2,898
11,154 11,924
Jun 17 Jun 18
+6.9%
-10.0%
+14.2%
+11.5%
(Million euros)
Loans to Customers (gross) Customers funds
Companies
Consumer
and other
Mortgage Foreign exchange
Demand
deposits
Term
deposits
Other BS
funds
Off-BS
funds
+5.8%
+14.6%
-7.0%
-5.0%
+12.2%
+15.6% excluding FX
mortgage loans
Mortgage Local currency
+22.4%
FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723.
80
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253|217|226
191|191|191
217|217|217
Growing net earnings
41.9 51.1
1H17 1H18
+22.0%
(Million euros)
113.2 120.9
1H17 1H18
+6.8% ROE 25.8% 26.1%
41.8 43.1
1H17 1H18
+3.0%
Net earnings of €51.1 million (+22.0%), with ROE of 26.1%
Increasing banking income (+6.8%), driven by higher net
interest income and other income
Customer funds grew 0.5%, loan portfolio down by 20.4%
Capital ratio of 25.8%
1.0 million active Customers, a 4% increase over June 30,
2017
Millennium bim was distinguished as the best bank in
Mozambique by both Global Finance and Euromoney
FX effect excluded. €/Metical constant at June 2018 levels : Income Statement 73.42791667; Balance Sheet 69.1250.
Net income
Operating costs
Banking income
81
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253|217|226
191|191|191
217|217|217 18.2 18.5
23.6 24.6
41.8 43.1
1H17 1H18
2,408 2,483
Jun 17 Jun 18
Growing income partially offset by the increase in
operating costs
+3.0%
(Million euros)
Staff costs
Other
89.4 92.2
1H17 1H18
+3.1%
179
190
Jun 17 Jun 18
+75 +11
Commissions
Other
+1.8%
+4.0%
NIM 10.7% 10.9% Cost to income 36.9% 35.7%
15.3 14.2
8.5 14.5
23.8 28.7
1H17 1H18
+20.6%
-7.0%
+70.1%
FX effect excluded. €/Metical constant at June 2018 levels : Income Statement 73.42791667; Balance Sheet 69.1250.
Net interest income
Commissions and other income
Operating costs
Branches Employees*
*Excludes employees from SIM (insurance company)
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Credit performance influenced by challenging environment
(Million euros)
NPL>90d ratio of 15.9% as of June 30, 2018,
with coverage by loan-loss reserves of 55%
on the same date
Maintenance of a high provisioning effort,
reflected in a risk cost of 326bp (320bp in
the first half of 2017)
Credit ratio Jun 17 Jun 18
NPL>90d 14.0% 15.9%
104.1 79.9
Jun 17 Jun 18
160.8 145.4
Jun 17 Jun 18
Cost of risk 320bp 326bp
17.3 14.1
1H17 1H18
-18.7%
Coverage ratio Jun 17 Jun 18
NPL>90d 65% 55%
NPL>90d ratio of 15.9% as of June 30, 2018,
with coverage by loan-loss reserves of 55%
on the same date
Maintenance of a high provisioning effort,
reflected in a risk cost of 326bp (320bp in
the first half of 2017)
FX effect excluded. €/Metical constant at June 2018 levels : Income Statement 73.42791667; Balance Sheet 69.1250.
NPL>90d
Loan impairment (net of recoveries)
Loan-loss reserves
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834 759
675 758
1,509 1,517
Jun 17 Jun 18
936 751
202
153
13
11
1,150
915
Jun 17 Jun 18
Growing deposits and lower credit
-20.4%
-23.9%
-19.8%
(Million euros)
Loans to Customers (gross) Customer funds
Companies
Consumer
and other
Mortgage
Demand
deposits
Term
deposits +12.3%
+0.5%
-13.3%
-9.0%
FX effect excluded. €/Metical constant at June 2018 levels : Income Statement 73.42791667; Balance Sheet 69.1250.
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1H 2018 earnings
Highlights
Group
• Profitability
• Business activity
• Capital
Portugal
International operations
Key figures
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Key figures
Consolidated
2018
<75 bp
-€3,0 billion
≈11%
<100%
<50%
≈43%
≈10%
Cost of risk
Cumulative NPE reduction
from January 1, 2016 (Portugal)
CET1 fully implemented
Loans to Deposits
Cost-Core Income1, 2
Cost–Income1
1H17 1H18
118 bp
-€1.9 billion
11.3%
95%
47.0%
45.2%
88 bp
-€3.9 billion
11.7%
88%
47.9%
46.6%
4.3% 6.8% RoE3
1 Excludes non-usual items.
2 Core income = net interest income + net fees and commission income.
3 Based on a fully implemented CET1 of 11%.
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Sovereign debt portfolio
(Million euros)
≤1y 24%
>1y, ≤2y 12%
>2y, ≤5y 26%
>5y, ≤8y 34%
>8y, ≤10y 2%
>10y 2%
The sovereign debt portfolio totalled €11.6 billion, €2.8 billion of which maturing within one
year
The Portuguese sovereign debt portfolio totalled €5.9 billion, whereas the Polish and
Mozambican portfolios amounted to €3.9 billion and to €0.6 billion, respectively; “other”
includes US sovereign debt of €0.8 billion
Sovereign debt maturity Sovereign debt portfolio
Portugal 5,089 4,696 5,938 +17% +26%
T-bills and other 845 499 721 -15% +44%
Bonds 4,244 4,197 5,217 +23% +24%
Poland 3,847 3,981 3,936 +2% -1%
Mozambique 379 553 626 +65% +13%
Other 612 1,068 1,090 +78% +2%
Total 9,928 10,299 11,590 +17% +13%
QoQJun 17 Jun 18 YoYMar 18
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Sovereign debt portfolio
(Million euros)
*Includes financial assets held for trading at fair value through net income (€33 million).
**Includes financial assets at fair value through other comprehensive income (€10,507 million) and financial assets at amortised cost (€735
million).
Portugal Poland Mozambique Other Total
Trading book* 37 284 0 27 348
≤ 1 year 0 44 0 0 44
> 1 year and ≤ 2 years 33 3 0 26 62
> 2 years and ≤ 5 years 2 196 0 0 199
> 5 years and ≤ 8 years 2 31 0 0 33
> 8 years and ≤ 10 years 0 11 0 0 11
> 10 years 0 0 0 1 1
Banking book** 5,900 3,652 626 1,063 11,242
≤ 1 year 674 765 455 862 2,756
> 1 year and ≤ 2 years 166 1,102 44 0 1,313
> 2 years and ≤ 5 years 1,023 1,669 18 103 2,814
> 5 years and ≤ 8 years 3,842 104 0 2 3,948
> 8 years and ≤ 10 years 7 12 38 96 153
> 10 years 187 0 71 0 259
Total 5,938 3,936 626 1,090 11,590
≤ 1 year 674 809 455 862 2,799
> 1 year and ≤ 2 years 199 1,105 44 26 1,374
> 2 years and ≤ 5 years 1,026 1,865 18 103 3,012
> 5 years and ≤ 8 years 3,844 135 0 2 3,981
> 8 years and ≤ 10 years 8 22 38 96 164
> 10 years 187 0 71 1 260
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Diversified and collateralised portfolio
Mortgage 46%
Consumer / other 8%
Companies 46%
58% 26% 16%
Real guarantees Other guarantees Unsecured
15% 11% 13% 27% 11% 11% 11%
0-40 40-50 50-60 60-75 75-80 80-90 >90
Loans
Loans to companies accounted for 46% of the loan portfolio at June 30, 2018, including 8% to construction and
real-estate sectors
Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an average LTV of 66%
84% of the loan portfolio is collateralised
Collaterals
Real estate accounts for 93% of total collateral value
80% of the real estate collateral is residential
Loans per collateral
LTV of the mortgage portfolio in Portugal
Loan portfolio Consolidated
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Consolidated earnings
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
**Core net income = net interest income + net fees and commission income - operating costs.
(million euros) 1H17 1H18 YoYImpact on
earnings
Net interest income 678.5 687.7 +1.3% +9.2
Net fees and commissions 330.3 340.2 +3.0% +9.9
Other income* 40.0 28.9 -27.7% -11.1
Banking income 1,048.8 1,056.8 +0.8% +8.0
Staff costs -241.5 -289.8 +20.0% -48.3
Other administrative costs and depreciation -208.7 -211.0 +1.1% -2.3
Operating costs -450.2 -500.8 +11.2% -50.6
Operating net income (before impairment and provisions) 598.6 556.0 -7.1% -42.6
Of which: core net income** 558.6 527.1 -5.6% -31.5
Loans impairment (net of recoveries) -305.0 -220.8 -27.6% +84.2
Other impairment and provisions -110.3 -59.0 -46.5% +51.3
Impairment and provisions -415.3 -279.8 -32.6% +135.5
Net income before income tax 183.3 276.2 +50.7% +92.9
Income taxes -43.4 -71.9 +65.5% -28.5
Non-controlling interests -51.2 -55.4 +8.2% -4.2
Net income from discontinued or to be discontinued operations 1.3 1.8 +40.0% +0.5
Net income 89.9 150.6 +67.5% +60.7
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Consolidated balance sheet
(Million euros)
30 June
2018
30 June
2017
Assets
Cash and deposits at Central Banks 2,165.8 1,650.9
Loans and advances to credit institutions
Repayable on demand 240.6 491.5
Other loans and advances 878.4 895.9
Loans and advances to customers 46,876.6 48,066.0
Other financial assets at amortised cost 1,061.5 451.3
Financial assets held for trading 1,037.2 974.0
Other financial assets not held for trading
mandatorily at fair value through profit or loss 1,386.4 -
Other financial assets held for trading
at fair value through profit or loss 32.9 142.0
Financial assets at fair value through other comprehensive income 12,049.8 12,384.7
Assets with repurchase agreement 24.9 15.4
Hedging derivatives 95.7 113.9
Investments in associated companies 488.6 596.0
Non-current assets held for sale 2,101.5 2,224.0
Investment property 12.1 12.3
Other tangible assets 487.8 487.4
Goodwill and intangible assets 171.6 164.3
Current tax assets 27.0 7.6
Deferred tax assets 2,938.1 3,165.4
Other assets 1,023.8 1,181.3
Total Assets 73,100.2 73,023.7
30 June
2018
30 June
2017
Liabilities
Resources from credit institutions 6,985.8 9,373.2
Resources from customers 53,454.6 50,635.7
Debt securities issued 2,602.1 3,121.4
Financial liabilities held for trading 340.0 476.2
Hedging derivatives 192.2 289.3
Provisions 325.9 339.1
Subordinated debt 1,151.7 850.6
Current tax liabilities 7.3 8.9
Deferred tax liabilities 4.4 1.6
Other liabilities 1,149.2 981.9
Total Liabilities 66,213.2 66,078.0
Equity
Share capital 5,600.7 5,600.7
Share premium 16.5 16.5
Preference shares 59.9 59.9
Other equity instruments 2.9 2.9
Legal and statutory reserves 264.6 252.8
Treasury shares (0.3) (0.3)
Fair value reserves 35.2 (23.3)
Reserves and retained earnings (327.8) (51.3)
Net income for the period attributable to Bank's Shareholders 150.6 89.9
Total equity attrib. to Shareholders of the Bank 5,802.4 5,947.9
Non-controlling interests 1,084.5 997.8
Total Equity 6,886.9 6,945.7
73,100.2 73,023.7
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(Million euros)
Consolidated income statement Per quarter
Net interest income 346.2 344.7 368.1 344.8 342.8
Dividends from equity instruments 1.5 0.1 0.1 0.1 0.6
Net fees and commission income 169.5 164.3 172.1 167.8 172.4
Other operating income -71.4 -10.4 -5.2 -29.1 -61.0
Net trading income 53.5 25.1 33.4 34.4 42.6
Equity accounted earnings 15.5 21.7 34.8 19.8 21.6
Banking income 514.8 545.5 603.2 537.8 519.0
Staff costs 104.6 138.6 146.5 142.3 147.5
Other administrative costs 94.0 92.2 99.3 89.5 93.1
Depreciation 13.4 13.6 13.9 14.2 14.2
Operating costs 211.9 244.4 259.6 246.0 254.8
Operating net income bef. imp. 302.9 301.1 343.6 291.8 264.2
Loans impairment (net of recoveries) 156.1 153.6 165.1 106.1 114.8
Other impairm. and provisions 56.0 59.6 131.2 23.9 35.1
Net income before income tax 90.8 87.9 47.3 161.8 114.3
Income tax 24.3 19.7 -33.0 49.3 22.6
Non-controlling interests 27.9 24.8 27.1 26.9 28.5
Net income (before disc. oper.) 38.6 43.4 53.1 85.6 63.3
Net income arising from discont. operations 1.3 0.0 0.0 0.0 1.8
Net income 39.8 43.4 53.1 85.6 65.1
2Q 17 2Q 181Q 184Q 173Q 17
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(Million euros)
Jun 17 Jun 18 Δ % Jun 17 Jun 18 Δ % Jun 17 Jun 18 Δ % Jun 17 Jun 18 Δ % Jun 17 Jun 18 Δ % Jun 17 Jun 18 Δ %
Interest income 957 936 -2.2% 532 496 -6.7% 425 440 3.6% 275 292 6.4% 147 145 -1.6% 3 3 -0.2%
Interest expense 278 248 -10.7% 141 111 -21.4% 137 137 0.3% 83 86 3.6% 56 53 -5.7% -3 -2 26.3%
N et interest inco me 678 688 1.3% 390 385 -1.4% 288 303 5.1% 191 206 7.6% 91 92 0.9% 6 5 -12.3%
Dividends from equity instruments 2 1 -61.4% 1 0 -93.8% 1 1 1.1% 1 1 -3.5% 0 0 -- 0 0 -29.0%
Intermediat io n margin 680 688 1.2% 391 385 -1.6% 289 303 5.1% 192 206 7.5% 91 92 1.0% 6 5 -12.3%
Net fees and commission income 330 340 3.0% 225 234 3.9% 105 106 1.1% 77 80 3.3% 16 14 -9.0% 12 12 -0.0%
Other operating income -87 -90 -4.0% -53 -59 -11.1% -34 -31 7.0% -37 -42 -12.9% 3 11 >100% 0 0 -35.6%
B asic inco me 924 938 1.6% 564 560 -0.6% 360 378 5.0% 232 244 5.3% 110 117 6.1% 18 17 -4.4%
Net trading income 90 77 -14.3% 59 46 -22.4% 31 31 1.1% 25 26 4.7% 5 4 -27.8% 1 2 60.6%
Equity accounted earnings 35 41 17.9% 19 29 48.0% 16 13 -19.1% 0 0 -- 0 0 -- 16 13 -19.1%
B anking inco me 1,049 1,057 0.8% 642 634 -1.2% 407 422 3.8% 256 270 5.2% 116 121 4.5% 35 32 -9.0%
Staff costs 241 290 20.0% 145 187 29.1% 96 102 6.3% 69 75 8.1% 19 19 -0.3% 9 9 6.1%
Other administrative costs 183 183 0.0% 110 108 -1.8% 73 75 2.9% 49 51 4.0% 20 21 0.3% 3 3 2.3%
Depreciation 26 28 8.5% 16 18 11.5% 10 10 3.8% 6 6 -0.1% 4 4 10.6% 0 0 5.0%
Operat ing co sts 450 501 11.2% 271 313 15.5% 179 188 4.8% 125 132 6.1% 43 43 0.9% 12 12 5.0%
Operat ing net inco me bef . imp. 599 556 -7.1% 371 321 -13.4% 228 235 3.0% 132 138 4.4% 73 78 6.7% 23 19 -16.2%
Loans impairment (net of recoveries) 305 221 -27.6% 258 192 -25.6% 47 29 -38.5% 29 21 -29.2% 18 14 -20.4% 0 -6 <-100%
Other impairm. and provisions 110 59 -46.5% 112 50 -55.9% -2 9 >100% 1 4 >100% -3 -1 74.4% 0 7 >100%
N et inco me befo re inco me tax 183 276 50.7% 1 80 >100% 183 196 7.5% 102 113 11.4% 58 64 11.1% 23 18 -18.8%
Income tax 43 72 65.5% -1 25 >100% 44 47 6.3% 28 31 10.5% 15 13 -12.6% 1 3 >100%
Non-contro lling interests 51 55 8.2% 0 -4 <-100% 51 60 16.0% 0 0 -- 0 0 1.4% 51 59 16.1%
N et inco me (befo re disc. o per.) 89 149 67.9% 2 59 >100% 87 90 3.1% 74 82 11.7% 43 51 19.4% -29 -44 -48.2%
Net income arising from discont. operations 1 2 40.0%
N et inco me 90 151 67.5%
M illennium bim (M o z.)
Internat io nal o perat io ns
Gro up P o rtugal T o tal B ank M illennium (P o land) Other int . o perat io ns
Income statement (Portugal and International operations)
For the 6-month periods ended June 30th, 2017 and de 2018
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Glossary (1/2)
Balance sheet impairment – Balance sheet impairment related to amortised cost and fair value adjustments related to loans to customers at fair value
through profit or loss.
Balance sheet customer funds - debt securities and customer deposits.
Commercial gap –loans to customers (gross) minus on-balance sheet customer funds.
Core income - net interest income plus net fees and commissions income.
Core net income - corresponding to net interest income plus net fees and commissions income deducted from operating costs.
Cost of risk, net (expressed in bp) - ratio of impairment charges (net of recoveries) accounted in the period to loans to customers at amortised cost before
impairment.
Cost to core income - operating costs divided by core income (net interest income and net fees and commissions income).
Cost to income – operating costs divided by net operating revenues.
Coverage of non-performing loans by balance sheet impairments – BS impairments divided by the stock of NPL.
Coverage of non-performing exposures by balance sheet impairments – BS impairments divided by the stock of NPE.
Debt securities - debt securities issued by the Bank and placed with customers.
Dividends from equity instruments - dividends received from investments classified as financial assets at fair value through other comprehensive income and
from financial assets held for trading.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the
Group does not control the financial and operational policies.
Insurance products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and “PPR/E”).
Loans to customers (gross) – Loans to customers at amortised cost before impairment and loans to customers at fair value through profit or loss before fair
value adjustments.
Loans to customers (net) - Loans to customers at amortised cost net of impairment and balance sheet amount of loans to customers at fair value through
profit or loss.
Loan to Deposits ratio (LTD) – Loans to customers (net) divided by total customer deposits.
Loan to value ratio (LTV) – Mortgage amount divided by the appraised value of property.
Net commissions - net fees and commissions income.
Net interest margin (NIM) - net interest income for the period as a percentage of average interest earning assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other
net operating income.
Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from financial assets at fair value through other
comprehensive income and financial assets at amortised cost.
Non-performing exposures (NPE, according to EBA definition) – Non-performing loans and advances to customers more than 90 days past-due or unlikely to
be paid without collateral realisation, even if they recognised as defaulted or impaired.
Non-performing loans (NPL) – Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-
overdue remaining principal.
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Glossary (2/2)
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as
payment in kind not fully covered by collateral, goodwill impairment and other provisions.
Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.
Other net operating income – net gains from insurance activity, other operating income/(loss) and gains/(losses) arising from sales of subsidiaries and other
assets.
Overdue loans - loans in arrears, including principal and interests.
Overdue loans by more than 90 days coverage ratio - BS impairments divided by total amount of overdue loans including installments of capital and interest
overdue more than 90 days.
Overdue loans coverage ratio – BS impairments divided by total amount of overdue loans including installments of capital and interest overdue.
Return on average assets (Instruction from the Bank of Portugal no. 16/2004) – Net income (before tax) divided by the average total assets.
Return on average assets (ROA) – Net income (before minority interests) divided by the average total assets.
Return on equity (Instruction from the Bank of Portugal no. 16/2004) – Net income (before tax) divided by the average attributable equity + non-
controlling interests.
Return on equity (ROE) – Net income (after minority interests) divided by the average attributable equity, deducted from preference shares and other
capital instruments.
Securities portfolio - financial assets held for trading, financial assets not held for trading mandatorily at fair value through profit or loss, financial assets at
fair value through other comprehensive income, assets with repurchase agreement, other financial assets at amortised cost and other financial assets
held for trading at fair value through profit or loss.
Spread - increase (in percentage points) to the index used by the Bank in loans granting or fund raising.
Total customer funds - balance sheet customer funds, assets under management, assets placed with customers and investment funds.
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Agenda
Macro and Business Overview
Performance 2013-2018
Strategic Plan 2018-2021
1H 2018 earnings
Other information
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3.6
+0.2 +0.2
+1.2
+0.7 5.9
NPLs>90d
Cross-default
Quaran-tine*
LLR/gross loans>20% or LLR>€5mn
Othertriggers
NPEs
The NPE reduction plan is being implemented Reconciliation of NPLs>90d with NPEs (EBA definition)
NPEs down €6.9 billion from end-2013
5.0 +0.4 +0.6 +1.6 +0.3
+0.7 8.5
NPL>90d
Cross-default
Quaren-tine*
LLR>20% or LLR> €5mn
Restruct.>45d
Othertriggers
NPE
Reconciliation of NPL>90d with NPEs
(EBA definition)
NPLs>90d vs NPEs (EBA definition)
(Billion euros, June 2018)
* 9 months following payment is resumed for loans to companies, 3 months for retail loans.
(Billion euros)
-2.3
-3.0
-1.5
12.8
5.9
Dec13 Net newentries
Writeoffs
Sales Jun18
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Latest Rating Actions recognized the progress made by
BCP in implementing its strategic plan
+3 notches +3 notches
+2 notches
S&P Stand-alone credit profile (SACP)
Fitch Viability Rating (VR)
Moody’s Baseline Credit Assessment (BCA)
BB-
B+
B
B-
2013 2014 2015 2016 2017
b2
b3
Caa1
Caa2
2013 2014 2015 2016 2017
bb-
b+
b
2013 2014 2015 2016 2017
Rating Agencies have recognized the progress achieved
by Millennium bcp since 2013
Excluding the effect of Government support removal
due to change in Rating Agencies methodology in order
to adjust for the BRRD, the intrinsic rate of BCP was
upgraded by 3 notches by S&P and Moody’s and by 2
notches by Fitch
Future upgrades of the Portuguese Republic rating
should provide room for an upgrade of BCP ratings
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Ratings
Moody's Standard & Poor's
Intrinsic Baseline Credit Assessment
Adjusted Baseline Credit Assessment
b2
B2
Stand-alone credit profile (SACP) bb-
LT/ST
Counterparty LT/ST
Deposits LT/ST
Senior unsecured LT/ST
Outlook deposits / senior
Ba1 / NP
B1 / NP
B1 / NP
Positive
Counterparty Credit Rating LT/ST
Senior Unsecured LT/ST
Outlook
BB-/ B
BB-/ B
Positive
Other
Subordinated Debt - MTN
Preference Shares
Other short term debt
Covered Bonds
(P) B3
Caa2 (hyb)
P (NP)
A2
Subordinated debt
Preference shares
B-
CCC
Fitch Ratings DBRS
Intrinsic
Viability Rating
Support
Support floor
bb- Intrinsic
Critical obligations
BB (high)
BBB/R-2(high) 5
No floor
LT/ST
Deposits LT/ST
Senior unsecured debt issues LT/ST
Outlook
BB- / B
BB- / B
Positive
Deposits LT / ST
Short-Term Debt LT / ST
Trend
BB (high) / R-3
BB (high) / R-3
Positive
Other
Subordinated Debt Lower Tier 2
Preference Shares
Covered Bonds
B+
B-
BBB+
Dated Subordinated Notes
Covered Bonds
BB (low)
A
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Progress recognised by the market
CDS 5 yr Portuguese Republic
CDS BCP yield curve (senior)
CDS 5 yr BCP
BCP CDS spreads have narrowed since the end of 2016
and after the completion of the share capital increase in
February 2017 but reflect also the progress made by the
Bank in reducing NPEs as well as the increase in NPEs
coverage
Besides this BCP’s intrinsic factors the BCP CDS spreads
benefitted also from the decrease in Portuguese
Republic CDS spreads
Spreads on senior preferred debt have also narrowed in
recent months because there was the introduction of a
new debt class in the Iberian markets: the senior non
preferred debt
1 year ago
As at June, 30
b.p.
b.p. b.p.
(Years)
0
200
400
600
800
1000
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18
0
100
200
300
400
500
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18
0
100
200
300
400
500
600
1 2 3 4 5 7 10
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New Senior Bond, CB and Subordinated issues signal
Millennium bcp’s return to capital debt markets
Issuer: Banco Comercial Português, S.A.
Issue Rating (M/F/D): A3/BBB+/A
Issue type: Mortgage Bonds
Amount: € 1,000m
Issue date: 23 May 2017
Settlement date: 31 May 2017
Maturity: 31 May 2022
Coupon: 0.750 %
Spread: MS+65bps
Re-offer yield: 0.876 %
Listing / ISIN: Irish Stock Exchange / PTBCPIOM0057
Asset Managers
45%
Central Banks & Official
Institutions 29%
Banks 21%
Insurance & Pension Funds
5%
Portugal 36%
Germany & Austria
25%
Spain 10%
France 10%
Benelux 7%
UK & Ireland
4%
Switzerl. 3%
Italy 3%
Other 2%
3 Yr Senior Unsecured Notes Breakdown by Investor Type and Geography
Breakdown by Investor Type and Geography 5 Yr Covered Bond Issue
Investment Funds 60%
Banks 16%
Hedge Funds 12%
Insurance and Pension Funds 10%
Other 2%
UK 33%
Portugal 20%
Italy 15%
France 11%
Deutschland 6%
Austria 6%
Spain 5%
Switzerland 4%
Issuer: Banco Comercial Português, S.A.
Issue Rating (S/M/F/D): B (Neg.) / B1 (Neg.) / BB- (Neg.) / BBBL (Neg.)
Issue type: Senior Unsecured Unsubordinated
Amount: € 500m
Issue date: 19 February 2014
Settlement date: 27 February 2014
Maturity: 27 February 2017
Coupon: 3.375 %
Spread: MS+285bps
Re-offer yield: 3.422 %
Listing / ISIN: London Stock Exchange / PTBITIOM0057
Breakdown by Investor Type and Geography 5 Yr subordinated Debt Issue
Issuer: Banco Comercial Português, S.A.
Issue Rating (M/S/F/D): B3/B-/B+/BB(L)
Amount: € 300mm
Issue date: 7 December 2017
Maturity: 7 December 2027
Issuer’s Call: 7 December 2022, subject to the prior approval of the
Relevant Authority
Coupon: 4.50 % (Fixed, Annual) until 7th December 2022. One time
reset year 5 to prevailing 5Y MS + 4.267% (initial margin)
Re-offer price: 100%
Listing / ISIN: Irish Stock Exchange / PTBCPWOM0034
Asset Manager
48% Hedge
Fund 37%
Bank & Private
Bank 11%
Insurance & Pension
5%
UK & Ireland 43%
Iberia 17%
Germany, Austria &
Switzerland 15%
FraBeLux 13%
Asia 5%
Other 4% Italy 3%
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