The figures presented do not constitute any form of commitment by BCP in regard to future earnings

Transcription

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2 Disclaimer The information in this presentation has been prepared under the scope of the International Financial Reporting Standards ( IFRS ) of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002 The figures presented do not constitute any form of commitment by BCP in regard to future earnings Figures for 2016 not audited The business figures presented exclude the former Banco Millennium Angola 2

3 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 3

4 Summary 1 Profits in 2016 ( 23.9 million), in spite of a significant increase of impairment charges to 1.6 billion. Strong profit performance excluding non-usual items Strong, consistent growth of the consolidated operating net income before provisions, in excess of 1 billion 2 Significantly lower NPEs and NPLs in Portugal, together with increased coverage, both by loan-loss reserves, to 39% from 31%, and total, including guarantees, to 100% from 93% 3 Capital strengthened in early February, allowing for the full repayment of CoCos and bringing the fully implemented CET1 ratio to >11% 4

5 Highlights: profitability Operating net income before impairment and non-usual items* Net income before non-usual items* 1, Operating net income before impairment and non-usual items increases to 1,024.8 million in 2016 from million in 2013 In spite of significant impairment charges ( 1,598 million), a 97.6 million profit was returned in 2016 excluding nonusual items, showing a strong performance from a 22.2 million loss in 2015, and a substantial continuous improvement over the last 4 years Stated net profit of 23.9 million in 2016 ( million in 2015) *Non-usual items in 2016: gains on Visa transaction, capital gains on Portuguese sovereign debt, impact from revision of collective labour agreement net of restructuring costs, devaluation of corporate restructuring funds and of goodwill, additional impairment charges to increase coverage and fiscal impact; in 2015: capital gains on Portuguese sovereign debt, restructuring costs, and devaluation of corporate restructuring funds; in 2014: capital gains on Portuguese sovereign debt, capital gain on the sale of an insurance subsidiary and AQR provisions; in 2013: costs with mutually-agreed terminations and with early retirements. 5

6 Highlights: asset quality Non-performing exposures (NPEs) 86% 90% 12,783 10,921 Net new entries in NPL>90 days 93% 100% Coverage* 9,777 8,542 6,213 6,134 5,572 5,029 Dec 13 Dec 14 Dec 15 Dec Other NPEs NPL>90d NPEs in Portugal down to 8.5 billion as at December 31, 2016, showing a strong pace of reduction from 2013: 1.4 billion per year, on average NPE total coverage* up to 100%, with coverage by loan-loss reserves up to 39% (23% as at year-end 2013), thus supporting the < 7.5 billion NPE target for December 2017 NPL>90 days down to 5.0 billion as at December 31, 2016, with net new entries showing a significant reduction to 139 million Coverage by provisions of NPL>90 days strengthened to 69% as of year-end 2016 (51% as at the end of 2013) *By loan-loss reserves, expected loss gap and collaterals. 6

7 Highlights: capital Phased-in capital ratio (CET1 CRD IV / CRR)* Fully implemented 10.2% 9.6% 11.1% 13.3% 12.4% 12.8% Dez 15 Dez 16 1 Jan 17 adj. to cap. increase, CoCo rep.** Shareholding structure following cap. increase Non-PT Institutionals 21% Non-PT Retail 2% PT Institut. 7% PT Retail 29% Fosun 24% EDP 2% Sonangol 15% 1.3 billion share capital increase completed in February 7, Demand exceeded supply by 23% Repayment of CoCos and end to State support, the latter having translated into a total cost, including extraordinary contribution by the banking sector, in excess of 1 billion from January 2009 to February 2017 CET1 ratios reinforced to 11.1% on a fully implemented basis and to 12.8% under phased-in principles** Shareholding structure following share capital increase with a significant presence of Portuguese investors (38%) and strong free-float (61%) Only bank with equities listed in the PSI-20 index *Estimates. **Estimates as at January 31, 2017, adjusted by the impact of the capital increase and of CoCo repayment, both completed in February

8 Highlights: business in Portugal Individuals Customer acquisition Packages More than 1 million Customers with day-to-day management solutions Companies 180,000 new Customers Customer evaluation Customers Elected best for Companies, closest to Customers and most innovating bank by DATA E Acquisition and re-activation of 13,500 Customers Treasury bonds Placement of million variable income Treasury bonds POSs Installed POSs up by 12% Loans to individuals New mortgages and consumer loans up from 1.2 billion to 1.5 billion (+28%) Factoring Factoring invoicing up by 35%, average credit balance up by 50% from 2015 Online brokerage Leading banking group in online brokerage with a 23.7% market share Support to exports Millennium Exportação conference and Portugal Global roadshow Digital banking More than 680,000 active users Agrobusiness Partnership with Agroges, designed to support investment related to Rural Development Program

9 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 9

10 Profit of 23.9 million in 2016, with a significant improvement of earnings excluding non-usual items (million euros) Impact on earnings Core net income (net int income+commissions oper. costs) Other operating income Operating net income (bef. impairment and provisions) , Impairment and provisions Net income before income tax Income taxes, non-controlling interests and disc. operations Net income excluding non-usual items Non-usual items, net of taxes Net income

11 Non-usual items (million euros) Impact on earnings Gains on Visa transaction Capital gains on Portuguese sovereign debt Impact from revision of collective agreement, net of rest. costs Fiscal impact Additional impairment charges (to increase coverage)* Devaluation of corporate restructuring funds Devaluation of goodwill Non-usual items, gross Non-usual items, net of taxes and non-controling interests * Impairment charges in excess of 120bp consolidated cost of risk, to reinforce NPE coverage. 11

12 Profit of 23.9 million in 2016, with a significant improvement of earnings excluding non-usual items Total impact: Net Income 2015 Impact of additional impairment to increase coverage Impact of lower gains on Portuguese sovereign debt Impact of devaluation of corporate restructuring funds Impact of goodwill devaluation Impact of Visa transaction Impact rev. collective lab. agreem. net of restructuring costs Fiscal impact Improvement to earnings excluding non-usual items Net Income

13 as well as core net income, reflecting strong performance in Portugal Core net income*, consolidated Portugal +31.2% 1, % Impact rev. collective labour agreement, net of restructuring costs International operations % w/o FX impact +6.8% Impact rev. collective labour agreement, net of restructuring costs * Core net income = net interest income + net fees and commission income operating costs. 13

14 Net interest income increase driven by the continuation of reduction of cost of deposits Net interest income, consolidated Net interest margin 1.8% 1.9% Excluding CoCos 1.9% 2.0% +3.3% 1, ,190.6 Portugal Net interest margin 1.5% 1.6% +3.5% International operations Net interest margin +19.8% w/o FX impact 2.5% 2.7% +3.1%

15 whereas FX devaluation led to lower commissions Fees and commissions, consolidated Portugal +1.9% YoY Banking fees and commissions % Cards and transfers % Loans and guarantees % Bancassurance % Customer account related % Other fees and commissions % Market related fees and commissions % Securities operations % International operations % -0.6% w/o FX impact Asset management % Total fees and commissions % 15

16 Performance of other income influenced by gains on PT sovereign debt in 2015 Other income, consolidated Portugal % % Visa transaction Gains on PT sov. debt International operations % 89.3 Visa transaction Gains on PT sov. debt Visa transaction

17 Cost reduction continues... Operating costs, consolidated Portugal Cost to core income* Depreciation Cost to core income* 55.5% 52.3% 54.6% 51.5% -2.2% -4.5% , % 49.8 Other administrative costs % Impact rev. labour agreem., net of restructuring costs International operations Staff costs % Cost to core income 54.0% 50.2% +5.9% w/o FX impact -8.5% Impact rev. labour agreem., net of restructuring costs *Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost to core income including non-usual items: 55.0% in 2015 and 41.6% in 2016, in consolidated terms, and 55.5% in 2015 e 36.7% in 2016, in Portugal. 17

18 ... making Millennium bcp one of the most efficient banks in the Eurozone Cost to core income* Cost to core income* Latest available data vs. peers in Portugal vs. Euro-zone banks 85.7% -34pp 52% 52% 64.0% 54.6% 51.5% Bank 1 77% 65% Bank 2 67% 77% Cost to core income* Bank 3 77% 115% 85.7% 84.1% 80.0% Bank 4 56% 97% 51.5% 63% 84% *Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost to core income including non-usual items: 55.0% in 2015 and 41.6% in

19 We have reinforced the balance sheet with a significant amount of additional impairment and provision charges... Impairment and provisions, consolidated Portugal +63.4% 1, Other % 1, Other Loans Cost of risk bp 1, bp Loans Cost of risk Additional impairment Devaluation of corporate restr funds Goodwill devaluation 1, bp 150bp International operations Other impairment and provisions Loan impairment, net of recoveries Cost of risk bp -13.9% +0.5% w/o FX impact bp 19

20 with lower delinquency and increased coverage Credit quality, consolidated Portugal Total coverage NPEs* NPEs Other 91.1% 99.1% -11.4% 10,581 9,379 4,609 3,994 Total cov. NPEs* NPEs Loan-loss reserves -12.6% Operações internacionais 92.6% 100.2% 9,777 8,542 Dec 15 Dec 16 2,991 3,346 Total cov. NPEs* 72.9% 87.9% NPL>90d 5,971 5,385 NPEs +4.1% Total coverage NPL>90d* 161.5% 172.6% Loan-loss reserves Dec 15 Dec 16 3,420 3,741 Loan-loss reserves Dec 15 Dec *By loan-loss reserves, expected loss gap and collaterals. 20

21 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 21

22 Deposits influenced by FX impact in international operations; stable individuals and companies deposits in Portugal Customer Funds, consolidated Customer deposits in Portugal Off-BS -1.7% 64,485 63,377 12,327 funds 12,943 33,049 32,652 Other BS funds Term deposits 2,311 1,636 30,188 26,781 Other (inc public sector) Companies and Individuals -2.3% 34,816 34,023 1,767 1,371 Dec 15 Dec 16 Customer deposits in international op. +5.1% w/o FX impact -1.7% 15,031 14, % increase including the placement of 709 million in OTRV Ondemand deposits 19,659 22,017 Dec 15 Dec 16 Dec 15 Dec 16 22

23 Credit portfolio reflects support to economy in key business sectors, in spite of continuing deleveraging and NPE reduction Loans to Customers (gross), consolidated Mortgage -4.9% 54,443 51,758 25,040 24,018 Portugal Mortgage Consumer / other Companies -5.4% 41,595 39,361 18,465 17,698 2,423 2,435 20,708 19,227 Reduction of exposure to construction/real estate activities (-17%); Strong performance of mining and manufacturing (+3% vs banking system 0.3%) and commerce (+4% vs 1% banking system) Dec 15 Dec 16 Consumer and other Companies 4,045 25,358 4,058 23,682 International operations +3.0% sem efeito cambial -3.5% 12,848 12,398 Dec15 Dec 16 Dec 15 Dec 16 23

24 Growing new loans to individuals, new leasing business and factoring invoicing Loans to individuals, new business Leasing, new business +28.4% 1, % ,200.2 Factoring invoicing 3,631 2, % +32.9% 4,909 2,740 1, % 2,169 Confirming Factoring 24

25 Comfortable liquidity position Net loans to deposits ratio ECB funding Net loans as a % of BS Customer funds 98% 95% -4pp 102% 98% (Billion euros) Elegible assets TLTRO Other Dec 15 Dec 16 Liquidity ratios (CRD IV/CRR) 112% 124% Regulatory requirement 100% 80% Dec 15 Dec 16 NSFR (Net stable funding ratio) LCR (Liquidity coverage ratio) 25

26 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 26

27 Strengthened capital, in line with European peers Common Equity Tier 1 ratio Phased-in, latest available data Common Equity Tier 1 ratio* vs. Euro-zone banks 13.3% 12.8% 12.8% * 10.2% 11.1% 12.0% 12.6% 10.5% Dez 15 1 Jan 17 incl cap. increase, CoCo repaym. Dez 15 1 Jan 17 incl cap. increase, CoCo repaym. Phased-in Fully implemented 11.7% RWAs ( Bln) * * *Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCo repayment, both completed in February

28 Capital reinforced, high RWA density From equity to CET1 capital* (Million euros, December 2016) Phased-in: 12.8% RWA density RWAs as % of assets, latest available information 5,690 Deductions % 4,315 CET1 ratio fully imp. 45% 45% 55% -1, % 26% Equity DTAs EL gap Stakes >10% Other CET1 fully imp. FR DE ES IT Minimum phased-in capital requirements (SREP) Pillar 1 Conservation buffer Countercyclical buffer Other syst. important institutions buffer Pillar 2 requirements (P2R) Total require -ments 1 Jan 17 Phased-in CET1 4.50% 1.25% 0.00% 0.00% 2.40% 8.15% 12.8% Total capital 8.00% 1.25% 0.00% 0.00% 2.40% 11.65% 14.0% *Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCo repayment, both completed in February

29 Capital at comfortable levels, high leverage ratios Leverage ratio Leverage ratio Phased-in, latest available information 7.3% 7.4% 4.0% 5.0% 5.8% 5.6% 7.4% 5.6% 6.0% FR DE ES IT Texas ratio* 139.6% 101.3% Dec 15 Dec 16 Dec 15 Dec 16 Phased-in Fully implemented Dec 15 Dec 16 *Texas ratio = NPE / (Tangible equity + stock of impairments). 29

30 Pension fund Key figures Pension fund Dec 15 Dec 16 Loans to banks, other 31% Equities 17% Assumptions Pension liabilities 3,136 3,093 Pension fund 3,158 3,124 Liabilities' coverage 111% 112% Fund's profitability -0.8% -2.6% Actuarial differences (111) (303) Property 9% Bonds 43% Discount rate Salary growth rate Dec % 0.75% until % after 2017 Dec % 0.25% until % after 2019 Change of assumptions: discount rate down to 2.1%, similar to the expected rate of return of the fund; review to wage and pensions growth rates; revision to men s mortality table Pensions growth rate Projected rate of return of fund assets Mortality Tables Men Women 0.00% until % after % Tv 73/77-2 years Tv 88/90-3 years 0.00% until % after % Tv 88/90 Tv 88/90-3 years Pension liabilities coverage at 112% Negative actuarial differences in 2016 (- 303 million), mainly reflecting a lower discount rate and the fund s underperformance vs assumptions, partially offset by the favourable impact of the revision of wage and pensions growth rates 30

31 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 31

32 Portugal: deleveraging improves liquidity position Customer funds Loans to Customers (gross) -1.7% 47,965 47,168 Off-BS funds 10,909 11,601 41, % 39,361 Other BS funds 2,241 1,545 Mortgage 18,465 17,698 Term deposits 21,936 19,938 Consumer and other 2,423 2,435 Companies 20,708 19,227 On-demand deposits 12,880 14,084 Dec 15 Dec 16 Dec 15 Dec 16 32

33 Significant improvement of earnings excluding non-usual items Net income excluding non-usual items Net income of - 157,3 million in Non-usual items Net income Net income excluding non-usual items Gains on Visa transaction Gains on Portuguese sovereign debt Impact from rev. labour agr. (net of rest. costs) Fiscal impact Add. impairment charges (to increase coverage)* Devaluation of corporate restructuring funds Devaluation of goodwill Total non-usual items, net Net income Net income amounted to million in 2016 without non-usual items, a million improvement from million in Non-usual items in 2016: gains on Visa transaction, capital gains on Portuguese sovereign debt, impact from revision of collective labour agreement net of restructuring costs, devaluation of corporate restructuring funds and of goodwill, additional impairment charges to increase coverage and fiscal impact; non-usual items in 2015: capital gains on Portuguese sovereign debt, restructuring costs, and devaluation of corporate restructuring funds. * Impairment charges in excess of 120bp consolidated cost of risk, to reinforce NPE coverage. 33

34 Improvement trend on core income and operating costs continues in Portugal Core net income* excluding non-usual items Core Income +2.9% 1, , Commissions Net interest income Operating costs excluding non-usual items Core income increases to 1.2 billion in 2016 Operating costs down to 438 million in the same period Continuation of the core net income* expansion trend, to 754 million in 2016 * Core net income = net interest income + net fees and commission income operating costs. 34

35 Lower cost of deposits and NPLs more than compensate for the decreases of credit volumes and Euribor Net interest income NIM +3.5% % 1.6% Breakdown of net interest income Commercial margin 4Q16 vs. 3Q vs Loans volume effect Effect of lower Euribor on credit Effect of cost of time deposits Funding and other Total commercial margin Securities NPL effect Other Total Increase in net interest income compared to 2015, reflecting the impact of the consistent reduction of the cost of term deposits and the reduction of NPLs, more than compensating for the negative effect of the reduction of Euribor rates and of lower credit volumes, as well as of the lower contribution from the securities portfolio Increased net interest income vs the previous quarter, mainly attributable to lower NPL volumes and to the continuing reduction of the cost of term deposits, more than compensating for a lower credit volume and for the negative effect of the reduction of Euribor rates CoCo repayment will have a 65 million positive impact on net interest income 35

36 Continued effort to reduce the cost of deposits Spread on the book of term deposits (vs 3m Euribor) Spread on the performing loan book (vs 3m Euribor) 3.0% 2.9% -0.8% -1.2% NIM 1.5% 1.6% Continued improvement of the spread of the portfolio of term deposits: from -1.2% in 2015 to -0.8% in 2016; December s front book, priced at an average spread of -64bp, is still below current back book s Spread on the performing loan book at 2.9% in 2016 (3.0% in 2015) NIM stood at 1.6% (1.5% in 2015) 36

37 Increased commissions YoY Banking fees and commissions % Cards and transfers % Loans and guarantees % Bancassurance % Customer account related % Other fees and commissions % Market related fees and commissions % Securities operations % Asset management % Total fees and commissions % 37

38 Continuous reduction of costs, in line with the new commercial approach Operating costs Employees Cost to core income* 55.5% 52.3% ,459 7,333 Depreciation excluding non-usual items Other administrative costs Branches Dec 15 Dec Staff costs Dec 15 Dec 16 * Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost to core income including non-usual items: 55.5% in 2015 and 36.7% in

39 Reinforced coverage of NPL>90d NPL>90d Credit ratio Dec 15 Dec 16 NPL>90d 13.4% 12.8% Loan loss reserves Coverage ratio Dec 15 Dec 16 NPL>90d 53.7% 66.5% 5,572 5,029 2,991 3,346 Dec 15 Dec 16 Dec 15 Dec 16 NPL>90d build-up Loan impairment (net of recoveries) 2016 vs Dec 16 vs.sep 16 Opening balance 5,572 5,454 +/- Net entries Write-offs Sales bp bp 1,045.2 Ending balance 5,029 5,029 39

40 Lower NPEs with reinforced coverage Non-performing exposures (NPEs) 93% -9.8% 100% Coverage* 9,777 8,542 5,572 5,029 Dec 15 Dec 16 Other NPEs NPL>90d NPE coverage 101% 99% 100% 36% 69% 46% 19% 15% 8% 24% 44% 39% Individuals Companies Total Real estate collateral Cash, other fin. collat., EL gap LLRs NPL>90d coverage Other NPE coverage 98% 100% 100% 107% 97% 100% 64% 32% 43% 14% 11% 4% 30% 54% 46% Individuals Companies Total Real estate collateral Cash, other fin. collat., EL gap LLRs 78% 41% 49% 23% 22% 17% 12% 33% 28% Individuals Companies Total Real estate collateral Cash, other fin. collat., EL gap LLRs *By loan-loss reserves, expected loss gap and collaterals. 40

41 Foreclosed assets sold above book value Foreclosed assets Number of properties sold 1, % 2,390 2,566 1, Impairment 234 Book value of sold properties Net value 1,212 1,582 Sale value % Dec 15 Dec 16 41

42 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 42

43 Contribution from international operations Contribution from international operations increases on a comparable basis International operations Δ % local currency Δ % euros Poland % +22.6% 10.4% Mozambique % -15.4% 23.1% Angola* % -16.3% Other % +21.4% Net income % +4.8% Non-controlling interests Poland and Mozambique Exchange rate effect Total contribution international operations % On a comparable basis: Millennium Poland shareholding at 50.1% in 1Q % Same as above without FX effect % ROE * Contribution of the Angolan operation. Significant FX impact % Contribution % Poland FX Effect 2015 comparable Contribution 2016 Note: subsidiaries net income presented for 2015 at the same exchange rate as of 2016 for comparison purposes, without FX effect. 43

44 Poland: growing customer funds Customer funds Loans to Customers (gross) Off-BS funds Other BS funds 13,580 1, % +0.5% +33.7% 14,306 1, % 10,845 10,971 Term deposits 6, % 5,919 Mortgage 6, % 6,307 Ondemand deposits 5, % 6,750 Consumer and other Companies 1, % 1,421 3, % 3,243 Dec 15 Dec 16 Dec 15 Dec 16 FX effect excluded. /Zloty constant at December 2016 levels: Income Statement ; Balance Sheet

45 New banking tax and Visa Europe transaction strongly impact net earnings Net income Banking income ROE 9.1% 10.4% +28.3% % Operating costs % Net earnings increased by 28.3%, as the new banking tax ( 39.8 million) was more than compensated by the aggregate net impact in the amount ( 46.5 million) of the gains on the Visa transaction with booking additional provisions Increasing in banking income (22.6%), driven by the gains on the Visa transaction and also by the expansion of the net interest income Operating costs up by 2.3% Common equity tier 1 ratio of 17.3% at the end of December 2016 FX effect excluded. /Zloty constant at December 2016 levels: Income Statement ; Balance Sheet

46 Increase in net interest income and Visa Europe transaction impact Net interest income* Operating costs NIM 2.2% 2.4% Cost to income 53.9% 45.0% +9.7% +2.3% % Other admin. costs + depreciation Staff costs % Commissions and other income Employees Branches Other % ,911 5, Commissions % Dec 15 Dec 16 Dec 15 Dec 16 * 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 ( 12.2 million in 2015 and 11.6 million in 2016) is presented in net trading income. FX effect excluded. /Zloty constant at December 2016 levels: Income Statement ; Balance Sheet

47 Improved credit quality and comfortable coverage NPL>90d Credit ratio Dec 15 Dec 16 NPL>90d 2.8% 2.6% Loan loss reserves Coverage ratio Dec 15 Dec 16 NPL>90d 110% 107% Dec 15 Dec 16 Dec 15 Dec 16 Loan impairment (net of recoveries) Cost of risk 52bp 49bp -5.0% Improvement of NPL>90d ratio to 2.6% of total credit as at December 31, 2016 from 2.8% on the same date of the previous year Provision coverage of NPL>90d at 107% from 110% year-end 2015 Lower provisioning effort, as reflected by cost of risk decreasing to 49bp (52bp in 2015) FX effect excluded. /Zloty constant at December 2016 levels: Income Statement ; Balance Sheet

48 Mozambique: strong volume growth Customer funds Loans to Customers (gross) Term deposits 1, % +13.5% 1, Mortgage Consumer and other % -3.2% +0.5% 1, Ondemand deposits % 718 Companies % 907 Dec 15 Dec 16 Dec 15 Dec 16 FX effect excluded. /Metical constant at December 2016 levels: Income Statement ; Balance Sheet

49 Increasing net income in a complex environment Net income Banking income ROE 19.6% 23.1% +34.3% % Operating costs +20.2% Net income up by 34.3%, with ROE at 23.1%, in spite of an increased tax burden Increase of 34.4% in banking income due to higher net interest income Operating costs up by 20.2% Capital ratio at 18.8% FX effect excluded. /Metical constant at December 2016 levels: Income Statement ; Balance Sheet

50 Growth in core income partially offset by the increase in operating costs Net interest income NIM 6.3% 9.3% +57.7% Operating costs Cost to income 43.9% 39.3% +20.2% % 7.7 Depreciation 7.2 Other admin % costs Staff costs % 35.9 Commissions and other income Employees* Branches Other +1.8% % ,351 2, Commissions % 30.6 Dec 15 Dec 16 * Excludes employees from SIM (insurance company) Dec 15 Dec 16 FX effect excluded. /Metical constant at December 2016 levels: Income Statement ; Balance Sheet

51 Stable credit quality and reinforced coverage NPL>90d Credit ratio Dec 15 Dec 16 NPL>90d 6.2% 6.0% Loan loss reserves Coverage ratio Dec 15 Dec 16 NPL>90d 96% 121% Dec 15 Dec 16 Dec 15 Dec 16 Loan impairment (net of recoveries) Cost of risk 155bp 195bp NPL>90d ratio of 6.0% as at December 31 st, 2016 with reinforced coverage: 121% as at the same date Increased provisioning effort, as reflected by a 195bp cost of risk in 2016, up from 155bp in 2015 FX effect excluded. /Metical constant at December 2016 levels: Income Statement ; Balance Sheet

52 Agenda Highlights Group Profitability Liquidity Capital Portugal International operations Conclusions 52

53 Road to 2018: targets Consolidated 2018 CT1 / CET1 13.3% phased 10.2% fully 12.8%* phased 11.1%* fully 11% Loans to Deposits 102% 98% < 100% Cost Income** 53.0% 48.5% < 43% Cost Core Income** 54.6% 51.5% < 50% Cost of risk 150 bp 216 bp < 75 bp ROE 5.3% 0.6% 10% With CET1 fully implemented of 11% *Estimated values on January 1, 2017, including the impact of the capital increase and the full reimbursement of CoCos, both concluded on February **Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost-income including non-usual items: 44.2% in 2015, 37.2% in 2016; cost-core-income including non-usual items: 55.0% in 2015, 41.6% in

54 Millennium bcp: a bank focused on its values and ready for the future 1 Balance sheet strengthened by the recent share capital increase, that, as a result of the efforts by Shareholders and by all other Stakeholders, permitted CoCos to be repaid and the strategic independence of the Bank to be regained, with a zero cost for Portuguese taxpayers Unique position in Portuguese banking 2 Largest private sector bank based in Portugal with a balanced shareholder structure with strong Portuguese presence 3 Profitable operation with recurring capacity to generate operating results in excess of 1 billion per annum 4 Well-positioned in a rapidly changing landscape, following the completion of the restructuring plan successfully implemented over the last years 5 Prepared to support individuals and companies 54

55 Appendix 55

56 Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity Dec 15 Sep 16 Dec 16 YoY QoQ Portugal 3,865 4,355 4,124 +7% -5% T-bills % -21% >8years, 10years 5% >5years, 8years 27% >10years 0% 1year 21% Bonds 2,984 3,528 3, % -2% Poland 2,312 3,406 3, % -2% Angola Mozambique % -7% Other % +1% Total 7,319 8,097 7,765 +6% -4% >2years, 5years 27% >1year, 2years 20% Sovereign debt portfolio totals 7.8 billion, 1.7 billion of which maturing in less than 1 year The value of Portuguese and Polish sovereign portfolios increased from December 31 st 2015; exposure to Angolan and Mozambican sovereign debt decreased 56

57 Sovereign debt portfolio Portugal Poland Mozambique Other Total Trading book* year > 1 year and 2 years > 2 years and 5 years > 5 years and 8 years > 8 years and 10 years > 10 years Banking book** 3,960 3, ,492 1 year ,595 > 1 year and 2 years 301 1, ,461 > 2 years and 5 years 556 1, ,006 > 5 years and 8 years 2, ,074 > 8 years and 10 years > 10 years Total 4,124 3, ,765 1 year ,665 > 1 year and 2 years 419 1, ,582 > 2 years and 5 years 593 1, ,066 > 5 years and 8 years 2, ,091 > 8 years and 10 years > 10 years * Includes financial assets held for trading at fair value through net income ( 147 million). ** Includes AFS portfolio ( 7,340 million) and HTM portfolio ( 50 million). 57

58 The NPE reduction plan is being implemented (Billion euros) NPEs down > 4 billion from end-2013 NPEs per year of origination 72% 18% 10% 100% Dec 13 Net new entries Write offs Sales Dec 16 < >2011 Dec 16 * 9 months following payment is resumed for loans to companies, 3 months for retail loans. 58

59 Diversified and collaterised portfolio Loan portfolio Consolidated Companies 46% Loans by collateral Mortgage 46% 55% 27% 19% Real guarantees Other guarantees Unsecured LTV of mortgage portfolio in Portugal 15% 10% 13% 27% 11% 13% 12% Consumer / other 8% >90 Loans to companies accounted for 46% of the loan portfolio at December 31, 2016, including 8% to construction and real-estate sectors 82% of the loan portfolio is collateralised Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an average LTV of 66% Real estate accounts for 95% of total collateral value 80% of the real estate collateral is residential 59

60 Consolidated earnings (million euros) Impact on earnings Net interest income 1, , Net fees and commissions Other operating income Of which: Visa transaction Of which: Capital gains on Portuguese sovereign debt Banking income 2, , Staff costs Of which: Impact from rev. collective agreement, net of rest. costs Other administrative costs and depreciation Operating costs -1, Operating net income (before impairment and provisions) 1, , Of which: core net income , Loans impairment (net of recoveries) , Other impairment and provisions Of which: Devaluation of corporate restructuring funds Of which: Devaluation of goodwill Impairment and provisions , Net income before income tax Income taxes Of which: Fiscal impact Non-controlling interests Net income from discontinued or to be discontinued operations Net income

61 Consolidated balance sheet 31 December December 2015 Assets Cash and deposits at central banks 1, ,840.3 Loans and advances to credit institutions Repayable on demand Other loans and advances 1, Loans and advances to customers 48, ,970.2 Financial assets held for trading 1, ,188.8 Other financial assets held for trading at fair value through profit or loss Financial assets available for sale 10, ,779.0 Assets with repurchase agreement Hedging derivatives Financial assets held to maturity Investments in associated companies Non current assets held for sale 2, ,765.4 Investment property Property and equipment Goodwill and intangible assets Current tax assets Deferred tax assets 3, ,561.5 Other assets 1, , , December December 2015 Liabilities Amounts owed to credit institutions 9, ,591.0 Amounts owed to customers 48, ,538.6 Debt securities 3, ,768.3 Financial liabilities held for trading Hedging derivatives Provisions for liabilities and charges Subordinated debt 1, ,645.4 Current income tax liabilities Deferred income tax liabilities Other liabilities ,074.7 Total Liabilities 65, ,204.3 Equity Share capital 4, ,094.2 Treasury stock (2.9) (1.2) Share premium Preference shares Other capital instruments Legal and statutory reserves Fair value reserves (130.6) 23.3 Reserves and retained earnings (102.3) (31.0) Net income for the year attrib. to Shareholders Total equity attrib. to Shareholders of the Bank 4, ,623.2 Non-controlling interests ,057.4 Total Equity 5, , , ,

62 Consolidated income statement Per quarter Quarterly 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 Net interest income Dividends from equity instruments Net fees and commission income Other operating income Net trading income Equity accounted earnings Banking income Staff costs Other administrative costs Depreciation Operating costs Operating net income bef. imp Loans impairment (net of recoveries) Other impairm. and provisions Net income before income tax Income tax Non-controlling interests Net income (before disc. oper.) Net income arising from discont. operations Net income

63 Consolidated income statement Per quarter (million euros) 3Q16 4Q16 Impact on earnings Core net income Other operating income Operating net income (bef. impairment and provisions) Impairment and provisions Net income before income tax Income taxes, non-controlling interests and disc. operations Net income excluding non-usual items Non-usual items, net of taxes Net income

64 Income statement (Portugal and International operations) For the 12-month periods ended 31 th December, 2015 and 2016 International operations Group P ortugal Total Bank M illennium (P oland) M illennium bim (M o z.) Other int. operations D ec 15 D ec 16 Δ % D ec 15 D ec 16 Δ % D ec 15 D ec 16 Δ % D ec 15 D ec 16 Δ % D ec 15 D ec 16 Δ % D ec 15 D ec 16 Δ % Interest income 2,159 1, % 1,379 1, % % % % % Interest expense % % % % % % Net interest income 1,191 1, % % % % % % Dividends from equity instruments % % % % % Intermediation margin 1,200 1, % % % % % % Net fees and commission income % % % % % % Other operating income % % % % % % Basic income 1,741 1, % 1,085 1, % % % % % Net trading income % % % >100% % % Equity accounted earnings >100% >100% 0 13 >100% % Banking income 2,304 2, % 1,552 1, % % % % % Staff costs % % % % % % Other administrative costs % % % % % % Depreciation % % % % % % Operating costs 1, % % % % % % Operating net income bef. imp. 1,286 1, % % % % % % Loans impairment (net of recoveries) 818 1, % 730 1, % % % % 2-2 <-100% Other impairm. and provisions >100% >100% % 3 10 >100% 4 0 <-100% % Net income before income tax <-100% <-100% % % % >100% Income tax <-100% <-100% % % % % Non-controlling interests % % % % % Net income (before disc. oper.) <-100% <-100% % % % % Net income arising from discont. operations % % % Net income % % % 64

65 Glossary (1/2) Capitalisation products includes unit linked saving products and retirement saving plans ( PPR, PPE and PPR/E ). Commercial gap total loans to customers net of BS impairments accumulated minus on-balance sheet customer funds. Cost of risk, gross (expressed in bp)- ratio of impairment charges accounted in the period to customer loans (gross). Cost of risk, net (expressed in bp)- ratio of impairment charges (net of recoveries) accounted to customer loans (gross). Cost to income operating costs divided by net operating revenues. Cost to core income - operating costs divided by the net interest income and net fees and commission income. Core income - net interest income plus net fees and commission income. Core net income - corresponding to net interest income plus net commissions deducted from operating costs. Coverage of credit at risk by balance sheet impairments total BS impairments accumulated for risks of credit divided by credit at risk (gross) Coverage of credit at risk by balance sheet impairments and real/financial guarantees total BS impairments accumulated for risks of credit plus real and financial guarantees divided by credit at risk (gross). Coverage of non-performing loans by balance sheet impairments total BS impairments accumulated for risks of credit divided by NPL Credit at risk definition broader than the non performing loans which includes also restructured loans whose changes from initial terms have resulted in the bank being in a higher risk position than previously; restructured loans which have resulted in the bank becoming in a lower risk position (e.g. reinforced collateral) are not included in credit at risk. Credit at risk (net) credit at risk deducted from BS impairments accumulated for risks of credit. Customer spread Difference between the spread on the loans to customers book over 3 months Euribor and the spread on the customers deposits portfolio over 3 months Euribor. Debt securities - debt securities issued by the Bank and placed with customers. Dividends from equity instruments - dividends received from investments in financial assets held for trading and available for sale. Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the Group does not control the financial and operational policies. Loan book spread - average spread on the loan portfolio over 3 months Euribor. Loan to value ratio (LTV) Mortgage amount divided by the appraised value of property. Loan to Deposits ratio (LTD) Total loans to customers net of accumulated BS impairments for risks of credit to total customer deposits. Net interest margin - net interest income for the period as a percentage of average interest earning assets. Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other net operating income. Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from available for sale financial assets, net gains/losses arising from financial assets held to maturity. Non-performing exposures (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. Considers also all the exposures if the on-bs 90 days past due reaches 20% of the outstanding amount of total on-bs exposure of the debtor, even if no pull effect is used for default or impairment classification. Includes also the loans in quarantine period over which the debtor has to prove its ability to meet the restructured conditions, even if forbearance has led to the exit form default or impairments classes. Non-performing exposures coverage ratio Total BS impairments plus collaterals and expected loss gap divided by non-performing exposures. 65

66 Glossary (2/2) Non-performing loans Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining principal. Non-performing loans ratio (net) Loans more than 90 days overdue and doubtful loans reclassified as overdue for provisioning purposes less BS impairments accumulated for credit risk divided by total loans (gross). Non-performing loans coverage ratio Total BS impairments accumulated for credit risk divided by overdue and doubtful loans divided. Loans losses reserves - Total BS impairments. Loans more than 90 days overdue coverage - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with instalments of capital and interest overdue more than 90 days. Operating costs - staff costs, other administrative costs and depreciation. Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, goodwill impairment and other provisions. Other net income net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings. Other net operating income - other operating income, other net income from non-banking activities and gains from the sale of subsidiaries and other assets. Overdue loans - loans in arrears, not including the non-overdue remaining principal. Overdue loans coverage ratio total BS impairments accumulated for risks of credit divided by total amount of loans overdue with instalments of capital and interest overdue. Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes. Return on equity (ROE) Net income divided by the average attributable equity, deducted from preference shares and other capital instruments. Return on average assets (ROA) Net income divided by the average total assets. Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement, financial assets held to maturity and other financial assets held for trading at fair value through net income. Spread on term deposits portfolio average spread on terms deposits portfolio over 3 months Euribor. Tangible Equity Shareholders equity minus goodwill and intangible assets. Texas ratio Non performing exposures divided by the sum of Tangible equity and Loan Losses Reserves i.e. NPE / (Tangible equity + LLRs). Total customer funds - amounts due to customers (including debt securities), assets under management and capitalisation products. Total operating income net interest income, dividends from equity instruments, net fees and commissions income, trading income, equity accounted earnings and other operating income. 66

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