Annex: BPI Business Plan

Transcription

1 Annex: BPI Business Plan BPI vs. BCP: Value Creation versus Value Destruction 29

2 Transition to International Accounting Standards (IAS/IFRS) Banco BPI s consolidated financial statements at 31 December 2005 were prepared in accordance with International Accounting Standards/International Financial Reporting Standards (IAS/IFRS), as adopted by the European Union in accordance with Regulation (EC) 1606/2002 of July 19 of the European Parliament and Council and incorporated into Portuguese legislation through Bank of Portugal Notice 1/2005 of February 21. Up to December 31, 2004 the BPI Group s financial statements were prepared and presented in accordance with the Chart of Accounts for the Portuguese Banking System (Plano de Contas para o Sistema Bancário - PCSB) established by the Bank of Portugal Regulation 4/96 of June 17. INFORMATION COMPARABILITY In order to ensure comparability with the preceding year, the financial statements as of December 31, 2004 (2004 PF) were restated in accordance with IAS/IFRS Pro-forma financial statements as defined by IFRS 1 First-time adoption of international financial reporting standards - except those regarding to IAS 32, IAS 39 and IFRS 4. IAS 32 Financial Instruments: Disclosure and Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts have been applied for the first time in the financial statements as of January 1, In the pro-forma financial statements as of December 31, 2004 assets and liabilities were distributed between the balance sheet captions in such a way as to permit comparability between the captions, but the criteria used for measuring and recognising financial assets and liabilities are in accordance with the Chart of Accounts for the Banking System established by the Bank of Portugal, and insurance contracts were recorded in accordance with the standards of the Insurance Institute of Portugal (Instituto de Seguros de Portugal) in force as of those dates. Therefore comparability with the financial statements as of December 31, 2004 is affected by the following main limitations resulting from application of IAS 32, IAS 39 and IFRS 4 only as from January 1, a) In 2005, securities included in the available-for-sale portfolio are recorded at fair value and the respective unrealised gains and losses are recognised in the shareholders equity caption fair value revaluation reserve, and impairment losses are recognised in the statement of income. The available-for-sale securities portfolio includes essentially securities that in 2004, in compliance with PCSB standards, were included in the investment portfolio or in equity investments: Unrealised losses on the investment securities portfolio were provided for by charge to the statement of income and unrealised gains were not recognised; and, Unrealised gains on equity investments were not recognised and unrealised losses were provided for in accordance with Bank of Portugal Notices 3/95 and 4/2002, of June 30 and June 25, respectively. In accordance with Bank of Portugal Notice 4/2002 of June 25, when the unrealised loss on an investment exceeds 15% of the corresponding book value of the investment, a minimum provision of 40% of that excess is required. The unrealised loss on an BPI vs. BCP: Value Creation versus Value Destruction 30

3 investment is determined using the average of the daily market prices for the last six months for listed companies, or using the company s equity value multiplied by the factor 1.5 for unlisted companies. b) In 2005 all financial derivatives were recognised at fair value and the related unrealised gains and losses are recorded in the statement of income. Changes in the fair value of financial 1 assets and liabilities included in fair value hedge operations that comply with the requirements of IAS 39 for purposes of applying hedge accounting rules are also recognised in the statement of income. In accordance with PCSB standards financial derivatives designated as hedging instruments were recognised at amortised cost, by considering interest and premiums on an accruals basis. Unrealised losses were not recognised and unrealised gains were only recognised up to the amount of the provisions recorded for the hedged asset. There were no requirements defined to demonstrate the effectiveness of the hedge. c) In 2005, fees and other costs/income relating to financial assets and liabilities recorded at amortised cost are recognised in the statement of income over the period of the operation. In accordance with PCSB standards, fees and other costs/income were recognised when paid or received. d) In 2005, impairment of the loan portfolio is determined on an individual basis in the case of loans of significant amount and individually or collectively in the case of operations which are not of significant amount. Impairment of the loan portfolio is determined based on the present value of the estimated future cash flows, discounted at the effective interest rate of the operations. In accordance with PCSB standards, the loan portfolio was subject to the recognition of specific provisions for credit in arrears and credit of doubtful collection and provisions for general credit risks, in accordance with Bank of Portugal Notice 3/95. e) In 2005, treasury stock and the gains and losses realised on their sale, net of taxes, are recognised directly in shareholders equity. Unrealised gains and losses are not recognised. In accordance with PCSB standards, treasury stock was recognised as an asset and the unrealised and realised gains and losses on treasury stock hedging the RVA (net of taxes) were recognised in the caption Other Liabilities amounts pending settlement. f) In 2005, provisions for claims variances relating to risk insurance in the shareholders equity and the statement of income of associated companies, is not recognised. In accordance with PCSB standards, the amount resulting from applying the equity method and the amount of the investment in insurance companies includes provisions for claims variances. 1 Financial Assets and Liabilities according to IAS 39 and IFRS 4. BPI vs. BCP: Value Creation versus Value Destruction 31

4 Macroeconomic Forecasts Assumptions: Investment recovers boosted by Government public investment plans, which should become more visible in Moreover, there is evidence of resurgence in Foreign Direct Investment. The Government stays committed to accomplishing the goals established in the Stability and Growth Plan , thus curbing public expenditure. In 2006 stronger growth in Portugal s external partners should boost exports. Afterwards, the ongoing restructuring which is taking place at corporate level should yield sustainable results, and contribute to enhance external competitiveness. Imports will expand in line with domestic demand growth, considering stable oil prices, albeit at high levels. Global economy maintains a considerable vitality; the US economy slows down but still expands above 2.5% annually; EUR/USD moves close to 1.20, without abrupt dollar losses; ECB has gained leeway to rise its key rate. Table 1: Portugal Economic Forecasts 2001A 2002A 2003A 2004A 2005A 2006E 2007E 2008E 2009E 2010E Real GDP (annual) (1.2) Household Spending (0.4) Public Spending (1.3) (0.8) (0.9) (1.0) (1.0) Investment 1.9 (4.8) (9.9) 1.5 (2.9) Exports Imports 1.3 (0.5) (0.7) Inflation Rate (average) Euribor 3M (yearly average) Bund 10y (yearly average) Source: Bank of Portugal and INE for observed data and Ministry of Finance projections (as in Stability and Growth Programme ), BPI for interest rates forecasts. BPI vs. BCP: Value Creation versus Value Destruction 32

5 Domestic Credit Assumptions: Housing loans to private individuals have been re-accelerating since middle New financial products which reduce households financial burden loans with longer maturity, higher residual value at maturity or increased loan-to-value justify this trend resumption despite high indebtedness levels. Consumption and other purposes credit should accelerate moderately, reflecting gradually improving domestic economy. Loans to non financial corporations should continue to recover, reflecting better prospects for investment and an improving domestic framework. Table 2: Credit to Residents Forecasts 1 March 2006 (annual growth rates) Total Non-financial Corporations Total Households Housing Consumption and Other Purposes % 26.6% 23.3% 23.8% 31.7% % 18.2% 15.9% 16.6% 13.9% % 7.8% 12.2% 15.2% 3.8% % 6.4% 10.6% 14.3% (1.0)% % 4.4% 10.7% 12.1% 5.8% % 2.6% 9.8% 11.5% 3.3% 2006E 8.0% 5.5% 10.9% 13.0% 1.5% 2007E 7.7% 6.0% 10.3% 12.0% 3.0% E 7.7% 6.5% 9.9% 11.0% 5.0% Source: Bank of Portugal (historical data), BPI (forecasts). 1) Excludes loans to public administration; Includes loans sold by other MFI through securitisation. BPI vs. BCP: Value Creation versus Value Destruction 33

6 Deposits Assumptions: Deposits (all maturities except overnight) should continue to slow down, reflecting the growing appealing from alternative applications (households) and investment recovering (corporations) Sight deposits decelerate, towards a growth rate closer to nominal GDP Non-resident deposits move accordingly to the declining five-year moving average Table 3: Deposits Forecasts 1 March 2006 (Annual Growth Residents Deposits Non-Residents Rates) Total Sight Deposits Other Total Deposits % 11.3% 10.4% 10.7% 22.3% % 3.0% 1.4% 2.0% 15.0% % 6.7% (2.6)% 0.9% 30.3% 2003 (1.3)% 0.9% (0.1)% 0.3% (11.0)% % 1.9% 1.7% 1.8% 24.9% % 8.0% 7.0% 7.4% 12.5% 2006E 6.5% 6.0% 5.0% 5.4% 14.3% 2007E 4.6% 3.5% 3.0% 3.2% 14.2% E 3.7% 3.0% 2.5% 2.7% 11.0% Source: Bank of Portugal (historical data), BPI (forecasts). 1 Considers all sectors; emigrants are considered residents; excludes all off-shores apart from Açores and Madeira. BPI vs. BCP: Value Creation versus Value Destruction 34

7 Macroeconomic Scenario Table 4: Macroeconomic Scenario Portugal 2004A 2005A 2006E 2007E 2008E 2009E 2010E GDP (real) 1.2% 0.3% 1.1% 1.8% 2.4% 3.0% 3.0% Inflation 2.5% 2.3% 2.3% 2.2% 2.2% 2.1% 2.1% Short Term Interest Rate 2.1% 2.2% 3.0% 3.6% 3.9% 4.1% 4.1% 10Y Interest Rate 4.1% 3.4% 4.0% 4.4% 4.6% 4.8% 4.8% Discount Rate for Pension Liabilities 5.3% 4.5% 5.1% 5.5% 5.7% 5.9% 5.9% Tax rate 27.5% 27.5% 27.5% 27.5% 27.5% 27.5% 27.5% Loans 6.0% 5.7% 8.0% 7.7% 7.7% 7.7% 7.7% Low: Mortgages 12.1% 11.5% 13.0% 12.0% 11.0% 11.0% 11.0% Deposits 4.1% 8.0% 6.5% 4.6% 3.7% 3.7% 3.7% Angola GDP (real) 11.2% 13.8% 24.5% 20.5% 10.0% 10.0% 10.0% Inflation 31.0% 15.0% 9.0% 5.0% 5.0% 5.0% 5.0% Short Term Interest Rate (AkZ) 50.0% 34.3% 15.0% 10.0% 8.0% 8.0% 8.0% Short term Interest Rate (USD) (avg.) 1.5% 3.5% 5.0% 4.8% 4.5% 4.5% 4.5% Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% Oil Price (USD/barrel) (avg.) Exchange Rate Eur/USD (year end) Exchange Rate AkZ/Eur (year end) Source: Bank of Portugal and INE for observed data and Ministry of Finance projections (as in Stability and Growth Programme ), interest rates forecasts from BPI; Angola Ministry of Finance; International Monetary Fund; EIA; BPI forecasts. BPI vs. BCP: Value Creation versus Value Destruction 35

8 BPI Group Highlights Table 5: Highlights ( m) 2005A 2006E 2007E 2008E 2009E 2010E CAGR Net Profit Change 16% 16% 15% 17% 14% 15.6% Shareholders Equity 1,181 1,381 1,610 1,866 2,163 2,492 ROE 23% 23% 23% 22% 23% 22% Net Operating Revenue / ATA 3.2% 3.1% 3.1% 3.1% 3.2% 3.2% Cost-to-Income 58% 58% 55% 53% 50% 48% Pay-Out 36% 38% 39% 41% 42% 44% Core Capital 5.9% 6.7% 7.2% 7.5% 7.6% 7.9% Tier1 7.3% 8.0% 8.4% 8.6% 8.6% 8.8% Domestic Activity Net Operating Revenue / ATA 2.9% 2.7% 2.7% 2.7% 2.7% 2.6% Cost-to-Income 63% 65% 62% 59% 56% 53% Net Profit Change 11% 19% 15% 14% 14% 14.6% International Activity Net Operating Revenue/ ATA 12% 11% 10% 9% 9% 8% Cost-to-Income 24% 25% 28% 30% 30% 31% Net Profit Change 28% 10% 14% 23% 16% 18.0% Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 36

9 BPI Group Profit and Loss Table 6: Profit and Loss m 04PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Net interest income % 554 8% % 666 9% % % Gross margin from unit links Income from equity instruments Commissions (net) related to amortised cost % 6 80% 7 25% 8 12% 9 10% 10 10% (2)% 14 (19)% 16 9% 17 9% 18 9% 20 9% % 17 10% 18 9% 20 9% 22 9% Net financial margin % 589 8% % 709 9% % % Technical result from insurance contracts (10)% 16 38% 18 10% 20 10% 22 10% 24 10% Commissions (net) % % % % % % Income on financial operations (net) Operational gains and losses % 79 6% 86 8% 94 9% % % (1) (6) 364% (6) 3% (6) 3% (7) 3% (7) 2% (7) 2% Net operating revenue % % 1,089 10% 1,198 10% 1,328 11% 1,460 10% Staff costs (284) (302) 7% (339) 12% (353) 4% (371) 5% (391) 5% (411) 5% Early retirements (77) (1) (99)% Other administrative expenses Depreciation and amortisation (171) (177) 3% (192) 8% (200) 5% (208) 4% (215) 4% (223) 4% (42) (39) (6%) (44) 11% (48) 11% (52) 8% (56) 7% (62) 11% General expenses (574) (519) (10)% (575) 11% (601) 5% (631) 5% (662) 5% (696) 5% Operational income % 412 8% % % % % Recovery of credits, interest and expenses Provisions and impairment of loans (net) Impairment and other provisions (net) % 19 10% 21 10% 22 5% 24 5% 25 5% (76) (65) (14%) (66) 2% (77) 16% (90) 17% (100) 12% (115) 14% 13 (36) (369)% (3) (90)% (4) 28% (5) 10% (6) 14% (7) 24% Profit before taxes % % % % % % Income tax (47) (60) 27% (84) 41% (104) 24% (124) 19% (148) 19% (169) 15% Income from equity accounted subsidiaries (6)% 27 9% 29 9% 32 9% 35 9% 38 9% Minority interests (9) (11) 22% (13) 17% (15) 14% (15) 6% (16) 4% (16) Net profit % % % % % % Dividends (euros per share) % % % % % % Dividends (total) Payout 48% 36% 38% 39% 41% 42% 44% Source: Management projections. 1 8% growth in 2005 adjusting for the commissions related to amortised cost included in net financial margin ( 14m in 2005). BPI vs. BCP: Value Creation versus Value Destruction 37

10 BPI Group Balance Sheet Table 7: Balance Sheet m 04PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Assets Cash and deposits % 818 (14)% % % 1,081 9% 1,178 9% Financial assets held for trading Financial assets available for sale Loans and advances to credit institutions Loans and advances to customers 2,051 4, % 4,597 10% 5,015 9% 5,469 9% 5,971 9% 6,526 9% 1,551 1,572 1% 1,718 9% 1,874 9% 2,042 9% 2,223 9% 2,418 9% 1, (17)% 1,321 44% 1,530 16% 1,678 10% 1,890 13% 2,135 13% 18,999 20,963 10% 23,348 11% 25,824 11% 28,477 10% 31,351 10% 34,425 10% Hedging derivatives % 356 5% 374 5% 392 5% 412 5% 433 5% Other tangible assets (2)% % 310 2% 327 5% 342 5% 358 4% Intangible assets 6 6 (2)% 6 5% 7 5% 7 5% 7 5% 8 6% Investments in associated companies (44)% 137 3% 141 3% 145 3% 149 3% 154 3% Tax assets (1)% 163 (24)% 140 (15)% 116(17)% 94 (19)% 82(12)% Other assets % 364 (39)% 263 (28)% 276 5% 290 5% 305 5% Total Assets 25,756 30,159 17% 33,133 10% 36,378 10% 39,919 10% 43,811 10% 48,022 10% Liabilities Financial liabilities held % 331 5% 348 5% 365 5% 383 5% 402 5% for trading Resources from banks 3,241 2,577 (20)% 2,518 (2)% 2,377 (6)% 2,358 (1)% 3,004 27% 3,824 27% Customer resources and other debts 12,760 14,028 10% 14,672 5% 15,778 8% 16,971 8% 18,211 7% 19,500 7% Debt securities 5,069 5,075 0% 5,282 4% 5,441 3% 5,616 3% 6,809 21% 8,021 18% Financial liabilities from securitized loans 2,000 3,500 75% 5,000 43% 6,500 30% 6,500 6,500 Hedging derivatives % 407 5% 428 5% 449 5% 472 5% 495 5% Provisions (10)% 57 13% 62 9% 68 8% 73 8% 79 8% Technical provisions 1,526 2,926 92% 3,218 10% 3,540 10% 3,894 10% 4,283 10% 4,712 10% Tax liabilities % 81 16% 88 9% 95 8% % 113 7% Participating bonds % Subordinated debt (4)% % % 860 5% Other liabilities (37)% 572 2% 593 4% 624 5% 656 5% 690 5% Total Liabilities 24,527 28,671 17% 31,446 10% 34,462 10% 37,747 10% 41,342 10% 45,224 9% Shareholders Equity Shareholders Equity Attributable to BPI 994 1,181 19% 1,381 17% 1,610 17% 1,866 16% 2,163 16% 2,492 15% Minority interests % 306 0% Total Shareholders 1,229 1,488 21% 1,687 13% 1,916 14% 2,172 13% 2,469 14% 2,798 13% Equity Total Liabilities and 25,756 30,159 17% 33,133 10% 36,378 10% 39,919 10% 43,811 10% 48,022 10% Shareholders Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 38

11 BPI Group Excess Capital Until 2010, BPI generates an excess capital of 786m relative to a core Tier 1 of 5.0%: Table 8: Excess Capital m 2005A 2006E 2007E 2008E 2009E 2010E Risk Weighted Assets 18,130 19,496 20,932 22,508 24,906 27,463 Core Capital 1 1,069 1,310 1,510 1,683 1,891 2,160 Capital for a 5% Core Capital ratio Excess Core Capital Source: Management projections. This excess capital can be used for profitable growth or for capital optimisation, providing further EPS enhancement. In these projections, this excess capital is conservatively assumed to yield short term Euribor 1) Defined as Tier I capital excluding preference shares. BPI vs. BCP: Value Creation versus Value Destruction 39

12 Domestic Activity Main assumptions Balance Sheet We have admitted an average annual growth rate of 9.1% for Customer Loans (mortgage lending with a CAGR of 8.5%) and of 7.3% for Customer Resources Table 9: Balance Sheet Items m 2004PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Loans to 18,787 20,544 9% 22,674 10% 24,775 9% 26,925 9% 29,261 9% 31,801 9% customers Mortgages 8,456 8,967 6% 9,729 9% 10,556 9% 11,453 9% 12,427 9% 13,483 9% Corporates % 9,127 14% 10,085 11% 10,992 9% 11,982 9% 13,060 9% Small business % 2,116 9% 2,307 9% 2,514 9% 2,741 9% 2,987 9% Other % 1,702 7% 1,827 7% 1,964 8% 2,112 8% 2,270 8% Customer resources 1 18,592 20,461 10% 22,196 9% 23,769 7% 25,431 7% 27,173 7% 29,063 7% On balance sheet 14,106 15,645 11% 16,657 7% 17,677 6% 18,729 6% 19,801 6% 20,955 6% Demand deposits 3,913 4,349 11% 4,610 6% 4,794 4% 4,986 4% 5,161 4% 5,341 4% Term deposits 6,878 6,359 (8%) 6,359 0% 6,582 4% 6,812 4% 7,016 3% 7,227 3% Capitalisation insurance Structured prod. and bonds 1,737 3, % 4,098 15% 4,552 11% 5,007 10% 5,507 10% 6,058 10% 1,578 1,383 (12%) 1,590 15% 1,749 10% 1,924 10% 2,117 10% 2,329 10% Off-balance sheet (mutual funds) 4,486 4,816 7% 5,538 15% 6,092 10% 6,701 10% 7,372 10% 8,109 10% Source: Management projections. Table 10: Market Shares 2005A 2006E 2007E 2008E 2009E 2010E Loans to customers 8.4% 8.6% 8.7% 8.8% 8.9% 9.0% Mortgage loans 9.6% 9.2% 8.9% 8.7% 8.5% 8.3% Deposits 8.0% 7.8% 7.8% 7.9% 7.9% 8.0% Source: Historical sector data from Bank of Portugal; Management projections. 1) Not including deposits from pensions funds ( 358m in 2004, 625m in 2005) nor preference shares ( 79m in 2005) BPI vs. BCP: Value Creation versus Value Destruction 40

13 Domestic Activity Main assumptions Volumes Growth Between 2005 and 2010 loans to customers increase 11.3bn and customer resources increase 8.6bn in the same period Table 11: Volume Growth m 2005A 2006E % 2007E % 2008E % 2009E % 2010E % CAGR 05/10 Loans to customers 1,758 2,129 10% 2,102 9% 2,150 9% 2,336 9% 2,540 9% 9% Mortgages % 827 9% 897 9% 974 9% 1,056 9% 9% Corporates 855 1,086 14% % 908 9% 989 9% 1,078 9% 10% Small businesses % 190 9% 208 9% 226 9% 247 9% 9% Other % 126 7% 137 8% 147 8% 158 8% 7% Customer resources 1,869 1,735 9% 1,574 7% 1,661 7% 1,742 7% 1,891 7% 7% On balance sheet 1,539 1,012 7% 1,020 6% 1,052 6% 1,072 6% 1,154 6% 6% Off-balance sheet % % % % % 11% Source: Management projections. Medium / long term financing: Securitisation: 1,500m / year of mortgage lending in (- 645m RWA / year) Senior debt: 1,000m / year in 2009/10 Subordinated debt: 127m in Feb-06; Re-finance of redemptions in 2006/08 5% annual growth in 2009/10 Preference shares: stable at 306m 2005/2008 5% annual growth in financial assets (trading + available for sale) excluding insurance portfolio, interbank credit, derivatives and other assets and liabilities BPI vs. BCP: Value Creation versus Value Destruction 41

14 Domestic Activity Main assumptions Net Interest Margin and Insurance Net interest margin was based on the following average spreads 1 : Table 12: Average Spreads 2005A 2006E 2007E 2008E 2009E 2010E Loans and advances to customers 1.65% 1.51% 1.39% 1.31% 1.26% 1.212% Mortgages 1.14% 1.00% 0.90% 0.80% 0.70% 0.60% Other % 1.89% 1.75% 1.68% 1.67% 1.67% Demand deposits (1.80)% (2.13)% (2.37)% (2.49)% (2.57)% (2.57)% Term deposits (0.34)% (0.34)% (0.34)% (0.34)% (0.34)% (0.34)% Debt securities - Clients (0.70)% (0.65)% (0.65)% (0.65)% (0.65)% (0.65)% Debt securities - Market 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% Financial liabilities from securitized loan 0.12% 0.17% 0.17% 0.17% 0.17% 0.17% Subordinated debt 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% Preference shares (minorities) 1.32% 1.15% 1.15% 1.15% 1.15% 1.15% Source: Management projections. Margin from unit links and results from capitalisation insurance were kept stable at 0.75% and 0.54% (2005/2010) Commissions related to amortised cost: 0.07% of customer loans (2005/2010) 1) Average spreads for the entire portfolio, in relation to short term interest rate. 2) 8% of this portfolio is fixed rate. For the remaining 92%, the assumption is a decrease of 25bp in the spread between 2005 and BPI vs. BCP: Value Creation versus Value Destruction 42

15 Domestic Activity Main assumptions Net Operating Income Dividends: BCP: 2006 = 0.07; 10% annual growth Other companies: 2006 BPI budget; 5% annual growth from 2007 onwards Commissions: the projected commissions' evolution (+9% to +10% per annum) is based in the following assumptions: Customer loans growth of around 9%; Asset management products growth of 15% in 2006 and 10% in 2007 and onwards, per annum; Strong increase in the sale of insurance products related to credit operations and stand-alone insurances, that BPI started selling in the last quarter of 2005; Growth of Investment Banking commissions and Project finance commissions resulting from capital markets recovery, privatisations and investment projects, namely in the sectors of transports, energy, tourism and other export activities. Profits on financial operations: Trading: 2006 budget; 5% annual growth from 2007 onwards Available for sale: 5m in 2006; 5% annual growth from 2007 onwards Pensions: assuming the expected fund return 0.75% above pension liabilities discount rate Table 13: Other operating income m 2004PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Dividends (2%) 14 (19%) 16 9% 17 9% 18 9% 20 9% BCP 8 8 0% 10 0% 11 10% 12 10% 14 10% 15 10% Other % 4 0% 4 5% 4 5% 5 5% 5 5% Commissions % % % % 356 9% 388 9% Profits on financial oper % 50 4% 50 0% 51 2% 53 3% 54 3% (net) Trading % 29 2% 31 5% 32 5% 34 5% 35 5% Available for sale % 5 (80%) 5 5% 6 5% 6 5% 6 5% Financial Results from (9) (6) 0% 16 0% 14 (9)% 13 (6)% 13 (3)% 13 (3)% Pensions Source: Management projections. 1) 5% growth in 2005 adjusting for the commissions related to amortised cost included in net financial margin ( 14m in 2005). BPI vs. BCP: Value Creation versus Value Destruction 43

16 Domestic Activity Main assumptions Staff Costs Increase of 230 employees in 2006 due to the opening of 40 new branches. From 2007 onwards the staff reduction (- 74 employees) corresponds to the employees retiring in each year (aged 65) and are not replaced. Table 14: Staff and distribution network 04PF 2005A %2006 F %2007 F %2008 F %2009 F %2010 F % Nr. Employees % % % % % % Nr. of retail branches Branches Mortgage shops Investment Centers Source: Management projections. The staff costs estimate assumes: Salaries: 2006 updated with February figures; growing 1% above inflation from 2007 onwards 10% annual growth in bonus No early retirements Evolution of pension costs reflects changes in actuarial assumptions Table 15: Staff Costs m % 2006 F % 2007 F % 2008 F % 2009 F % 2010 F % Salaries % 239 6% 247 3% 253 2% 256 1% 258 1% Bonus % 43 7% 48 10% 52 10% 58 10% 63 10% Pension costs % 36 60% 28-20% 26-8% 26-2% 25-2% Annual service cost Amortization of outside corridor 3 Other pension costs Staff costs % % 323 2% 332 3% 339 2% 347 2% Source: Management projections. Actuarial assumptions: Discount rate updated according to 10 year interest rates (plus 110bp), resulting in an Eur 420 mn decrease in pension liabilities and a reduction in annual pension costs Pension fund expected return 0.75% above the discount rate. BPI vs. BCP: Value Creation versus Value Destruction 44

17 Table 16: Pension assumptions m 2005A 2006 F 2007 F 2008 F 2009 F 2010 F Total Discount rate 4.50% 5.10% 5.50% 5.70% 5.90% 5.90% Pension fund expected return 5.25% 5.85% 6.25% 6.45% 6.65% 6.65% Actuarial changes impact: on pension liabilities on annual pension cost Corridor (amount used) Outside corridor 64 Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 45

18 Domestic Activity Main assumptions Other Profit and Loss items Administrative expenses and depreciation: average between BPI budget and annualised Feb-2006 figures; : growth in line with inflation Recovery of loans written-off: 10% annual growth in 2006/07; 5% annual growth in 2008/10 Loan impairments: 0.25% of customer loans (year-end) Income taxes: 27.35% tax rate on profit before taxes excluding: Tax-exempt dividends 5m of profits from off-shores Minority interests (preference shares) Profits of equity accounted subsidiaries: Allianz Portugal +15% in 2006, then +10% / year; Viacer according to BPI budget in 2006, then + 5% / year; Other equity subsidiaries + 10% / year BPI vs. BCP: Value Creation versus Value Destruction 46

19 Domestic Activity Profit and Loss Table 17: Domestic Activity Profit and Loss m 2004PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Net interest income % 449 2% 482 7% 510 6% 541 6% 571 6% Gross margin from unit links % 6 80% 7 25% 8 12% 9 10% 10 10% Income from equity instruments (2)% 14 (19)% 16 9% 17 9% 18 9% 20 9% Commissions (net) related to amortised cost % 17 10% 18 9% 20 9% 22 9% Net financial margin % 485 2% 522 8% 553 6% 588 6% 623 6% Technical result from insurance contracts (10)% 16 38% 18 10% 20 10% 22 10% 24 10% Commissions (net) % % % % 356 9% 388 9% Income on financial operations (net) % 50 4% 50 0% % 54 3% Operational gains and losses 0 (5) 2,581% (5) 2% (6) 2% (6) 2% (6) 2% (6) 2% Net operating revenue % 816 5% 881 8% 946 7% 1,013 7% 1,083 7% Staff costs (273) (288) 6% (318) 10% (323) 2% (332) 3 (339) 2 (347) 2% Early retirements (77) (1) (99)% 0 (100)% Other administrative expenses (162) (166) 2% (178) 7% (183) 3% (187) 2% (191) 2% (195) 2% Depreciation and amortisation (38) (35) (8)% (36) 2% (36) 2% (37) 2% (37) 1% (38) 1% General expenses (551) (489) (11)% (531) 9% (543) 2% (556) 2% (568) 2% (579) 2% Operating income % 284 (1)% % % % % Recovery of credits, interest and expenses % 19 10% 21 10% 22 5% 24 5% 25 5% Provisions and impairment of loans (net) (70) (54) (22)% (57) 5% (62) 9% (67) 9% (73) 9% (80) 9% Impairment and other provisions (net) 16 (33) (314)% Profit before taxes % % % % % % Income tax (31) (48) 57% (59) 22% (72) 22% (84) 17% (98) 16% (112) 15% Income from equity accounted subsidiaries (6)% 24 8% 26 9% 28 9% 31 9% 34 9% Minority interests (9) (11) 22% (13) 17% (15) 14% (15) 6% (16) 4% (16) 0% Net profit % % % % % % Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 47

20 Domestic Activity Balance Sheet Table 18: Domestic Activity Balance Sheet m 2004PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Assets Cash and deposits % 691 (13)% 719 4% 748 4% 774 3% 801 3% Financial assets held for trading 1,940 3, % 4,221 8% 4,563 8% 4,936 8% 5,341 8% 5,783 8% Financial assets available for sale 1,520 1,500 (1)% 1,621 8% 1,753 8% 1,896 8% 2,052 8% 2,222 8% Loans and advances to credit institutions (28)% 822 5% 931 5% 1,005 5% 1,085 5% 1,173 5% Loans and advances to customers 18,787 20,544 9% 22,674 10% 24,775 9% 26,925 9% 29,261 9% 31,801 9% Hedging derivatives % 356 5% 374 5% 392 5% 412 5% 433 5% Other tangible assets (4)% 248 3% 244 (1)% 241 (2)% 237 (1)% 235 (1)% Intangible assets 6 5 (4)% 6 5% 6 5% 6 5% 7 5% 7 5% Investments in associated companies (47)% 124 2% 126 2% 129 2% 132 2% 135 2% Tax assets (1)% 163 (24)% 140 (15)% 116 (17)% 94 (19)% 82 (12)% Other assets % 363 5% 262 5% 276 5% 289 5% 304 5% Total Assets 24,962 28,853 16% 31,289 8% 33,893 8% 36,669 8% 39,685 8% 42,975 8% Liabilities Financial liabilities held for trading % 331 5% 348 5% 365 5% 383 5% 402 5% Resources from banks 3,241 2,577 (20)% 2,518 (2)% 2,377 (6)% 2,358 (1)% 3,004 27% 3,824 27% Customer resources and other debts 12,130 12,932 7% 13,125 1% 13,692 4% 14,244 4% 14,762 4% 15,304 4% Debt securities 5,069 5,075 0% 5,282 4% 5,441 3% 5,616 3% 6,809 21% 8,021 18% Financial liabilities from securitized loans 0 2,000 3,500 75% 5,000 43% 6,500 30% 6,500 0% 6,500 0% Hedging derivatives % 407 5% 428 5% 449 5% 472 5% 495 5% Provisions % 52 13% 57 9% 62 9% 67 9% 73 9% Technical provisions 1,526 2,926 92% 3,218 10% 3,540 10% 3,894 10% 4,283 10% 4,712 10% Tax liabilities % 55 0% 55 0% 55 0% 55 0% 55 0% Participating bonds % 26 0% 26 0% 26 0% 26 0% 26 0% Subordinated debt (4)% % 780 0% 780 0% 819 5% 860 5% Other liabilities (37)% 545 5% 572 5% 601 5% 631 5% 662 5% Total Liabilities 23,818 27,514 16% 29,842 8% 32,317 8% 34,952 8% 37,812 8% 40,936 8% Shareholders Equity Shareholders equity attributable to BPI 908 1,033 14% 1,141 10% 1,269 11% 1,411 11% 1,566 11% 1,732 11% Minority interests % 306 0% 306 0% 306 0% 306 0% 306 0% Total Shareholders Equity 1,143 1,339 17% 1,447 8% 1,575 9% 1,718 9% 1,873 9% 2,039 9% Total Liabilities and Shareholders 24,962 28,853 16% 31,289 8% 33,893 8% 36,669 8% 39,685 8% 42,975 8% Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 48

21 International Activity Main assumptions Balance Sheet Table 19: Angolan banking system USD mn E 2007 E 2008 E 2009 E 2010 E Nominal GDP (billion USD) Oil production - thds of barrels/day nd GDP per capita (USD) Population (thousands) Banking penetration (%) (1) 5% 7% 8% 11% 13% 15% Population with bank accounts (thousands) Customer resources Loans to Customers Loans to deposits ratio 33% 39% 44% 51% 54% 54% Customer resources/gdp (2) 16% 17% 16% 16% 18% 19% Loans/GDP (3) 5% 6% 7% 8% 10% 10% Resources/Population with bank accounts Loans/Population with bank accounts ) Vs 39% in Venezuela, 25% in Brazil, 28% in Argentina and 30% in South Africa. 2) Vs 25% in Nigeria, 24% in Venezuela, 35% in Brazil, 38% in Argentina and 72% in South Africa. 3) Vs 12% in Nigeria, 17% in Venezuela, 22% in Brazil, 15% in Argentina and 58% in South Africa. Source: International Monetary Fund, State Budget 2006, BPI forecasts Table 20: BFA Eur mn E 2007 E 2008 E 2009 E 2010 E # Customers ( 000) # Branches Loans Deposits Loans per branch Deposits per branch Source: Management Projections. BPI vs. BCP: Value Creation versus Value Destruction 49

22 Table 21: Balance Sheet Items m 04PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % CAGR 05/10 Loans to % % 1,049 56% 1,553 48% 2,090 35% 2,625 26% 44% customers Loans AKZ % 10 99% % % % % Loans USD % % % 1,268 35% 1,585 25% 1,981 25% Volume growth ( m) Customer resources 627 1,069 71% 1,494 40% 2,006 34% 2,622 31% 3,318 27% 4,039 22% 30% Demand AKZ % % % % % % 42% Demand USD % % % 1,018 28% 1,272 25% 1,527 20% 24% Repo % 91 38% % % % % 28% Term % % % % 1,088 30% 1,363 25% 34% Volume growth ( m) Fin. assets held for trading (BT / TBC) Fin. assets available for sale (OT) % % % % % % 22% % 96 35% % % % % 22% Interbank credit % % % % % % 24% Source: Management projections. Cash and deposits with Central banks: 15% of customer resources Financial assets held for trading (BT/TBC): ~ 44% of financial applications (Interbank + BT/TBC) Other assets and liabilities: +10% / year Payout BFA: 0% BPI vs. BCP: Value Creation versus Value Destruction 50

23 International Activity Main assumptions Profit and Loss Net interest margin was based on the following average rates Table 22: Net Interest Income Local Currency (AKZ) Fin. assets held for trading (BT e TBC) 2005A 2006E 2007E 2008E 2009E 2010E Rate Spread Rate Spread Rate Spread Rate Spread Rate Spread Rate Spread 31.9% 15.0% 10.0% 8.0% 8.0% 8.0% Loans to customers 84.6% 15.0% 15.0% 12.5% 12.0% 12.0% Demand deposits 0.0% 0.0% 4.0% 5.0% 5.0% 5.0% (% of demand deposits interest bearing) 0.0% 0.0% 5.0% 10.0% 25.0% 40.0% Repo 28.2% 13.0% 8.0% 6.0% 6.0% 6.0% Foreign currency (USD) Fin. assets available for sale (OT) 8.1% 8.0% 8.0% 8.0% 8.0% 8.0% Loans to customers 8.9% 5.3% 10.0% 5.0% 9.3% 4.5% 8.5% 4.0% 8.5% 4.0% 8.5% 4.0% Demand deposits 1.5% (2.0)% 3.0% (2.0)% 2.8% (2.0)% 2.5% (2.0)% 2.5% (2.0)% 2.5% (2.0)% (% of demand deposits interest bearing) 3.1% 5.0% 10.0% 15.0% 25.0% 40.0% Term deposits 2.4% (1.1)% 4.0% (1.0)% 3.8% (1.0)% 3.5% (1.0)% 3.5% (1.0)% 3.5% (1.0)% Source: Management projections. Commissions and FX Table 23: Net Operating Revenue m 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Commissions 26 46% 37 44% 46 23% 55 21% 65 18% 75 15% % of loans and deposits 2.2% 2.0% 1.7% 1.5% 1.3% 1.2% Income on financial operations 27 15% 30 9% 35 20% 43 20% 51 20% 61 20% Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 51

24 International Activity Main assumptions Profit and Loss (Cont d) 70 branches by the end of 2006 and 150 in the end of 2010 Table 24: General Expenses m 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Nr. Branches New branches Nr. Employees 736 1,050 1,275 1,650 1,950 2,250 Employees per branch Staff costs % % % % % % Other administrative expenses % % % % % Investments % % % % % Depreciation charges % % % % % Source: Management projections. Loan impairment: 1.75% of loan portfolio in 2006/2008; 1.50% in 2009/10; Other provisions: 5% of previous year net profit allocated to social purposes; Income taxes: 35% of BFA s profit before taxes excluding income from OTs + 75% of income from BT/TBC; 27.3% of BCI net profit; BCI (Mozambique): 2006 BPI budget, +10% / year BPI vs. BCP: Value Creation versus Value Destruction 52

25 International Activity Profit and Loss Table 25: International Activity m 04PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Net interest income % % % % % % Net financial margin % % % % % % Commissions (net) % 37 44% 46 23% 55 23% 65 18% 75 15% Income on financial operations (net) % 30 9% 35 20% 43 20% 51 20% 61 20% Operational gains and losses (1) (1) (33)% (1) 5% (1) 5% (1) 5% (1) 5% (1) 5% Net operating revenue % % % % % % Staff costs (10) (14) 34% (21) 51% (29) 39% (39) 35% (52) 32% (65) 25% Other administrative expenses (9) (11) 22% (14) 23% (17) 21% (20) 19% (24) 19% (28) 16% Depreciation and amortisation (4) (5) 20% (8) 71% (12) 49% (15) 24% (18) 22% (24) 32% General expenses (24) (30) 27% (43) 44% (58) 35% (75) 28% (94) 26% (117) 24% Operating income % % % % % % Provisions and impairment of loans (net) (6) (10) 83% (10) (9)% (15) 58% (23) 51% (27) 20% (35) 29% Impairment and other provisions (net) (2) (2) (4)% (3) 55% (4) 28% (5) 10% (6) 14% (7) 24% Profit before taxes % % % % % % Income tax (16) (11) (30)% (25) 124% (32) 27% (40) 22% (50) 26% (58) 15% Income from equity accounted subsidiaries 3 2 (7)% 3 17% 3 10% 3 10% 4 10% 4 10% Net profit % 91 28% % % % % Dividends (total) Pay-out 0% 0% 0% 0% 0% 0% Net profit as a % of BPI Group 18% 29% 31% 30% 29% 31% 32% Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 53

26 International Activity Balance Sheet Table 26: International Activity m 04PF 2005A % 2006E % 2007E % 2008E % 2009E % 2010E % Assets Cash and deposits % 127 (22)% % % % % Financial assets held for trading % % % % % % Financial assets available for sale % 96 35% % % % % Loans and advances to credit institutions % % % % % % Loans and advances to customers % % 1,049 56% 1,553 48% 2,090 35% 2,625 26% Other tangible assets % 57 67% 66 16% 86 31% % % Intangible assets % 1 10% 1 10% 1 10% 1 10% 1 10% Investments in associated companies % 13 10% 14 10% 16 10% 18 10% 19 10% Tax assets 0 0 (14)% Other assets 1 1 (28)% 1 10% 1 10% 1 10% 1 10% 1 10% Total Assets 794 1,306 64% 1,844 41% 2,486 35% 3,250 31% 4,126 27% 5,047 22% Liabilities Customer resources and other debts 630 1,096 74% 1,547 41% 2,086 35% 2,727 31% 3,449 26% 4,196 22% Provisions 11 5 (59)% 5 9% 5 5% 6 5% 6 5% 6 5% Tax liabilities % 25 76% 32 27% 40 22% 50 26% 58 15% Other liabilities (35)% 27 (35)% 21 (21)% 23 10% 26 10% 28 10% Total Liabilities 709 1,157 63% 1,604 39% 2,145 34% 2,795 30% 3,530 26% 4,288 21% Shareholders Equity Shareholders equity % % % % % % Minority interests 0 0 (14)% Total Shareholders Equity % % % % % % Total Liabilities and Shareholders 794 1,306 64% 1,844 41% 2,486 35% 3,250 31% 4,126 27% 5,047 22% Source: Management projections. BPI vs. BCP: Value Creation versus Value Destruction 54

27 Domestic Retail Banking Assumptions Main assumptions Customers 27 branches opened in 2005 and 40 new branches in 2006 Progressive increase in average Customer acquisition per Branch (2005/2010: +16%) Maintenance of the Customer churn rate observed in 2005 (7.1%) Figure 27: Total Customers (thousands) +12.5% Market share in resident individuals 12.6% 13.5% +0.9 p.p. Source: BPI forecasts based on: Population - INE, 2004: Projecções População Residente Portugal ; Population using banking service: Marktest 2005: BASEF. BPI vs. BCP: Value Creation versus Value Destruction 55

28 Domestic Retail Banking Main assumptions Mortgage Loans Increase in average mortgage per Customer in line with growth observed in 2005 Average annual net increase of 7,250 Customers, in line with growth observed in 2005 Figure 28: Mortgage Portfolio ( m) +50.4% Product penetration 9.1% 10.5% Source: BPI estimates p.p. BPI vs. BCP: Value Creation versus Value Destruction 56

29 Domestic Retail Banking Main assumptions Personal Loans Growth in average Personal Loan per Customer of 0.5% above inflation, lower than the growth registered in 2005 By 2010, we estimate that 102 thousand Customers will have Personal Loans, corresponding to more 18 thousand relative to 2005) Figure 29: Personal Loans Portfolio ( m) +39.5% Product penetration 6.3% 6.8% Source: BPI estimates p.p. BPI vs. BCP: Value Creation versus Value Destruction 57

30 Domestic Retail Banking Main assumptions Car Finance Growth of average Car Finance per retail Customer in line with the one registered in 2005 (2.5%) Average annual net increase of 2,900 in Customers with Car Finance Figure 30: Car Finance Portfolio ( m) +76.1% Product penetration 2.0% 2.7% +0.7 p.p. Source: BPI estimates. BPI vs. BCP: Value Creation versus Value Destruction 58

31 Domestic Retail Banking Main assumptions Credit Cards Growth in average outstanding per Customer in line with inflation Average annual net increase of in Card holding Customers, lower than the growth observed in 2005 Figure 31: Credit Outstanding from Credit Cards 1 ( m) +33.6% Product penetration 21.3% 22.5% Source: BPI estimates p.p. 1 Figures reported include credit outstanding of cards owned by Clients of Banco BPI domestic retail operation. Therefore, excluding card owned by other distribution networks Clients and cards used by non-clients. BPI vs. BCP: Value Creation versus Value Destruction 59

32 Domestic Retail Banking Main assumptions Loans to Small Businesses Percentage of Small Businesses with loans at BPI will increase 0.1% each year Annual growth of average Loans to Small Business per Customer of circa 5%, substantially lower than in the 2 previous years Figure 32: Loans to Small Businesses ( m) +53.1% Product penetration 7.2% 7.7% Source: BPI estimates p.p. BPI vs. BCP: Value Creation versus Value Destruction 60

33 Domestic Retail Banking Total Resources 1 The increase of the total resources benefits from: The increase of the number of Clients of the retail banking The growth of assets held per Customer in line with previous two years (6%); Figure 33: Total Resources ( m) +47.2% Source: BPI estimates. 1) Excluding resources of both domestic and international Private Banking Clients. BPI vs. BCP: Value Creation versus Value Destruction 61

34 Domestic Retail Banking Business Estimated Internal Growth Potential (PIC) Estimated cross-selling potential in BPI s Individual Resident Customers Based on: Statistical models, developed by BPI, that estimate, at the customer level, the propensity for buying each product Market potential benchmarks, based on Market Research (BASEF, Marktest), that estimate, at the customer segment level, the growth potential for each product The two metrics are combined differently, according to BPI s strategy for each product and Customer Segment Product/Service Customer accounts potentially with Product 1 (%) Customers accounts potentially with Product (thousands) Salary Domiciling 25.2% Debit Cards 72.9% Credit Cards 33.9% Automated Debit Payments 48.3% Home Banking 58.9% Retirement Savings Plans 15.1% Capitalization Insurance 13.0% Mortgage Loans 18.2% Personal Loans 16.4% Car Finance 3.3% 26.7 Note: Any comparisons with business projections must consider that the Internal Growth Potential figures regard only a subset of BPI s Customers (Individual Resident Customers, aged 15 or more, with an active banking relation in December 2005). 1) Individual Resident Customers in Dec-2005, active banking relation with BPI (Assets > 50 or Credits > 250), aged 15 or older. 2) Total figure of credit cards issued by BPI in use by Clients is 496 thousands. Figure reported in table relates to individual resident customers as stated in note 1 above. BPI vs. BCP: Value Creation versus Value Destruction 62

35 Domestic Retail Banking Business Estimated Internal Growth Potential (PIC) Salary Domiciling Credit Cards 25.2% 23.0% 33.9% 28.0% Debit Cards 72.9% 68.4% Automatic Debit Payments HomeBanking 48.3% 41.5% 58.9% 53.5% Retirement Savings Plan Capitalisation Insurance Mortgage Loans 15.1% 12.6% 13.0% 10.0% 18.2% 13.5% Personal Loans 9.0% 16.4% Car Finance 3.3% 1.8% PIC Dec-2005 Source: BPI. Note 1: Individual Resident Customers accounts in Dec-2005, active banking relation (Assets > 50 or Credits > 250), aged 15 or older. Note 2: Any comparisons with business projections must consider that the Internal Growth Potential figures regard only a subset of BPI s Customers (Individual Resident Customers, aged 15 or more, with an active banking relation in December 2005). BPI vs. BCP: Value Creation versus Value Destruction 63

36 Domestic Retail Banking Business Annex Customers 2005A 2006E 2007E 2008E 2009E 2010E # Total Accounts 1,323,921 1,350,082 1,381,198 1,413,910 1,449,524 1,489,399 # Total Market Individuals (Residents over the Age of 15) 7,971,787 8,068,042 8,146,183 8,214,926 8,260,583 8,334,066 # Total BPI Individuals (Residents over the Age of 15) 1,001,446 1,021,235 1,044,771 1,069,516 1,096,456 1,126,618 BPI Market Share 12.6% 12.7% 12.8% 13.0% 13.3% 13.5% # BPI Branches at Year End # New Branches Customer Acquisition (BPI) 115, , , , , ,333 Customer Acquisition Rate 8.8% 9.0% 9.4% 9.4% 9.6% 9.8% New Customers per Branch (Considers Branches in Existence for over 12 Months) Average Annual Growth Rate per Branch of New Customers 1.00% 2.00% 3.00% 4.00% 5.00% Customer Churn (BPI) 91,950 93,581 95,430 97,629 99, ,459 Customer Churn Rate 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% Customer Churn per Branch (Considers Branches in Existence for over 12 Months) Source: BPI estimates. BPI vs. BCP: Value Creation versus Value Destruction 64

37 Domestic Retail Banking Business Annex Products Mortgage Loans 2005A 2006E 2007E 2008E 2009E 2010E Portfolio (Excludes Loans in Arrears) ( m) 8,967 9,729 10,556 11,453 12,427 13,483 Portfolio Growth Rate 6.2% 8.5% 8.5% 8.5% 8.5% 8.5% # Customers 120, , , , , ,824 Product Penetration 9.1% 9.4% 9.7% 10.0% 10.3% 10.5% Average Portfolio per Customer 74,372 76,561 78,813 81,132 83,520 85,977 Average Portfolio per Customer Growth Rate 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% Personal Loans Portfolio (Excludes Loans in Arrears) ( m) Portfolio Growth Rate 4.9% 6.7% 6.8% 6.8% 7.0% 7.1% # Customers 83,656 86,659 90,038 93,584 97, ,559 Product Penetration 6.3% 6.4% 6.5% 6.6% 6.7% 6.8% Average Portfolio per Customer 5,719 5,890 6,055 6,225 6,399 6,572 Average Portfolio per Customer Growth Rate 6.9% 3.0% 2.8% 2.8% 2.8% 2.7% Car Finance Portfolio (Excludes Loans in Arrears) ( m) Portfolio Growth Rate 3.9% 12.5% 12.3% 11.9% 11.6% 11.5% # Customers 25,876 28,412 31,139 33,997 37,028 40,281 Product Penetration 2.0% 2.1% 2.3% 2.4% 2.6% 2.7% Average Portfolio per Customer 10,683 10,950 11,223 11,504 11,792 12,086 Average Portfolio per Customer Growth Rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Credit Cards Portfolio (Excludes Loans in Arrears) ( m) Portfolio Growth Rate 3.9% 5.8% 5.9% 5.9% 6.1% 6.2% # Customers 281, , , , , ,256 Product Penetration 21.3% 21.5% 21.8% 22.0% 22.3% 22.5% Average Portfolio per Customer Average Portfolio per Customer Growth Rate -4.0% 2.5% 2.3% 2.3% 2.3% 2.2% Small Business Loans Portfolio (Excludes Loans in Arrears) ( m) 1,951 2,116 2,307 2,514 2,741 2,987 Portfolio Growth Rate 13.5% 8.5% 9.0% 9.0% 9.0% 9.0% # Customers 95,626 98, , , , ,025 Product Penetration 7.2% 7.3% 7.4% 7.5% 7.6% 7.7% Average Portfolio per Customer 20,402 21,403 22,502 23,635 24,806 25,968 Average Portfolio per Customer Growth Rate 17.7% 4.9% 5.1% 5.0% 5.0% 4.7% Total Resources Portfolio ( m) 16,927 18,388 19,896 21,505 23,149 24,924 Portfolio Growth Rate 8.4% 8.6% 8.2% 8.1% 7.6% 7.7% Average Portfolio per Customer 12,786 13,620 14,405 15,210 15,970 16,734 Average Portfolio per Customer Growth Rate 6.5% 6.5% 5.8% 5.6% 5.0% 4.8% Source: BPI estimates. BPI vs. BCP: Value Creation versus Value Destruction 65

38 Corporate Banking - Assumptions Loan portfolio Loan portfolio evolution in the corporate banking segment ( m): Segment 2004PF 2005A 2006E 2007E 2008E 2009E 2010E Corporate 5,226 5,496 6,115 6,727 7,399 7,991 8,630 Project Finance 804 1,090 1,370 1,635 1,783 2,091 2,435 Institutional Banking 1,155 1,456 1,642 1,724 1,810 1,900 1,995 Total 7,186 8,041 9,127 10,085 10,992 11,982 13,060 Growth rate 4% 12% 13% 11% 9% 9% 9% Source: Management projections Loan Portfolio breakdown: Institutional Bank ing, 18% Institutiona l Banking, 15% Project Finance, 14% Corporate, 68% Project Finance, 19% Corporate, 66% BPI vs. BCP: Value Creation versus Value Destruction 66