Banco Comercial Portugues

Earnings Release • Feb 21, 2019

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, as amended.

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

Figures for 2018 not audited.

The information in this presentation is for information purposes only, and should be read in conjunction with all other information made public by the BCP Group.

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

³

Highlights

• Capital ratio reinforced to 14.5%**, boosted by AT1 issue in January 2019, and comfortably above SREP requirements 2

The Executive Committee proposed the Board of Directors to approve a proposal for a dividend distribution corresponding to a 10% pay-out, to be submitted to the AGM

*Including non-audited earnings for 2018. **Including non-audited earnings for 2018 and AT1 issued in January 31, 2019 (€400 million).

Highlights

• Improved credit quality, with NPEs decreasing by €2.1 billion from December 31, 2017 3

• NPE coverage by loan-loss reserves increases to 52%, total* coverage rises to 109% 4

Highlights

• Increasing business volumes, with performing loans up by €2.2 billion and total Customers funds up €3.7 billion from end-2017 5
• +351,000 active Customers from December 31, 2017 6

*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

⁷

Improved profitability across geographies

Profit of €301.1 million in 2018

(million euros)	2017	2018	YoY	Impact on earnings
Net interest income	1,391.3	1,423.6	+2.3%	+32.4
Commissions	666.7	684.0	+2.6%	+17.3
Core income	2,058.0	2,107.7	+2.4%	+49.7
Other income*	139.5	78.9	-43.5%	-60.6	• Credit sales: -€40.2 million (-€9.2 million in 2017, -€49.4 million in 2018)
Operating costs	-954.2	-1,027.2	+7.7%	-73.0	• Reversal of salary cuts in Portugal: -€7.5
Of which: recurring	-968.4	-1,000.5	+3.3%	-32.1	million in 2018
Of which: non-usual items (staff costs)	14.2	-26.7		-40.9	• Non-usual staff costs: -€40.9 million (€14.2 million income in 2017, €26.7 million expense
Operating net income	1,243.3	1,159.3	-6.8%	-84.0	in 2018)
Impairment and provisions	-924.8	-601.1	-35.0%	+323.7
Net income before income tax	318.5	558.2	+75.3%	+239.7
Income taxes, non-controlling interests and discotinued operations	-132.1	-257.1	+94.7%	-125.0
Net income	186.4	301.1	+61.5%	+114.7

*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.

Sound performance of net interest income

10

Commissions boosted by increased business volumes

Other income* influenced by credit sales

*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.

Recurring operating costs under control, in spite of the impact from the reversal of salary cuts

Millennium bcp: one of the most efficient banks in the Eurozone

Cost of risk keeps a favourable trend

Relevant NPE reduction and strengthened coverage

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

¹⁷

Strong business dynamics results in growing Customer funds

(Billion euros)

*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).

Strong business dynamics, with increasing performing loan portfolio

Comfortable liquidity position

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

²¹

Strengthened capital

• CET1 capital ratio of 12.0%* (fully implemented) as of December 31, 2018
• Increase from 11.9% as of December 31, 2017 due to earnings for the year, partially offset by the impact of the IFRS9 adoption, by negative FX effects and by increased risk-weighted assets
• Increase from 11.8% as of September 30 due to earnings for the quarter and to lower deductions on DTAs and on significant investments
• Total capital ratio of 13.5%* (fully implemented) as of December 31, 2018
• AT1 issue, completed in January 31, 2019, to strengthen total capital to 14.5%**
• ECB decision on 2019 SREP requirements: minimum CET1 of 9.6%, including Pillar 1 of 4.5% and Pillar 2 of 2.25% (unchanged from 2018), and buffers of 2.875% (capital conservation: 2.5%; other systemically important institutions: 0.375%); minimum total capital requirement of 13.1%

Successful AT1 issue

AT1 issue

Issuer:	Banco Comercial Português, S.A.
Rating (M/S/F/D):	Caa1/CCC+/B-/B low
Amount:	€400 million
Issue date:	31 January 2019
Optional redemption:	By initiative of the issuer from 31 January 2024 onwards, subject to regulatory approval
Coupon:	9.25% per year until 31 January 2024, quarterly payment of interest; 5-year mid-swap rate + 941bp after that date
Listing:	Euronext Dublin
Demand:	1.6x Issue amount

Capital at adequate levels

Pension fund

Key figures
(Million euros)
	Pension liabilities	3,050	3,066
	Pension fund	3,166	3,078
	Liabilities' coverage	104%	100%
	Fund's profitability	+4.2%	+0.2%
	Actuarial differences	+29	(98)

Assumptions

	Dec 17	Dez 18
Discount rate	2.10%	2.10%
	0.25% until 2019	0.25% until 2019
Salary growth rate	0.75% after 2019	0.75% after 2019
Pensions growth rate	0.00% until 2019	0.00% until 2019
	0.50% after 2019	0.50% after 2019
Projected rate of return of fund assets	2.10%	2.10%
Mortality Tables
Men	Tv 88/90	Tv 88/90
Women	Tv 88/90-3 years	Tv 88/90-3 years

• Assumptions unchanged from December 31, 2017
• Liability coverage at 100%
• Negative actuarial differences in 2018 (-€98 million), mainly reflecting the performance

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

²⁶

Increased net income

27

Net interest income

• Net interest income stood at €803.3 million in 2018, comparing to €807.8 million in 2017. The favourable impacts of a lower wholesale funding cost and of the continued decline in the remuneration of time deposits were more than offset by the negative effects of the securities portfolio (increased balance yielding lower interest, reflecting lower sovereign yields from the end 2017); of lower average credit volumes, largely reflecting the emphasis on the reduction of NPEs (unlikely to pay); of lower credit yields, reflecting the normalisation of the macro-economic environment; and of the impact of IFRS9 adoption
• Net interest income stood at €207.5 million in the 4th quarter of 2018, comparing to €211.1 million in the 3rd quarter. The positive impacts from a lower wholesale funding, from the declining remuneration of time deposits and from a growing credit portfolio (reflected in a positive volume effect for the second quarter in a row) were more than offset by a lower contribution from recoveries of overdue interest

28

Continued effort to reduce the cost of deposits

Commissions and other income*

(Million euros)

2017	2018	YoY
392.2	411.0	+4.8%
104.9	111.3	+6.0%
104.6	108.9	+4.2%
78.1	81.2	+3.9%
92.5	94.8	+2.5%
12.1	14.8	+22.6%
63.4	64.2	+1.3%
56.7	58.0	+2.2%
6.6	6.3	-5.6%
455.5	475.2	+4.3%

• Growing commissions in Portugal, with income related to cards and transfers, to loans and guarantees, to bancassurance, to accounts and to investment banking standing out
• Decreased other income due to lower trading income (which includes -€49.4 million in sales of credit in 2018, compared to -€9.4 million in 2017) and to higher mandatory contributions (+€8.6 million)

*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.

Operating costs

Very strong pace of NPE reduction since 2013

• NPE in Portugal down to €4.8 billion as of December 31, 2018, a €2.0 billion reduction from year-end 2017
• This decrease is attributable to a €1.4 billion NPL> 90d reduction and to a €0.6 billion reduction of other NPE
• NPE total coverage* of 109%, broken down as follows:
• coverage by loan-loss reserves of 50%
• coverage by real estate collateral of 44%
• coverage by financial collateral of 15%
• coverage by expected loss gap of 1%
• NPE net from loan-loss reserves were down to €2.4 billion as of December 31, 2018 from €9.8 billion at year-end 2013

Lower NPEs, with reinforced coverage

Non-performing exposures (NPEs)					NPE build-up
	6,754	-29.0%				Dec 18 vs.Dec 17	Dec 18 vs.Sep 18
Other NPE	2,696		4,797 2,146		Opening balance +/- Net exits	6,754 -779	5,546 -281
NPL>90d	4,058		2,651		- Write-offs - Sales Ending balance	-448 -730 4,797	-146 -322 4,797
	Dec 17		Dec 18
Loan impairment		(net of recoveries)			NPE in Portugal down by €2.0 billion, from €6.8 billion as at December 31, 2017 to €4.8 billion as at the same date of 2018
Cost of risk	140bp		105bp		This decrease results from net outflows of €0.8 billion, sales of €0.7 billion and write-offs of €0.4 billion
	533.1		390.5		The decrease of NPE from December 31, 2017 is attributable to a €1.4 billion reduction of NPL>90d and to a €0.6 billion decrease of other NPE
					Significant NPE reduction in the quarter, from €5.5 billion as at September 30 to €4.8 billion as at December 31, 2018
Loan-loss reserves	2017 2,864		2018 2,383		Reduction of the cost of risk to 105bp in 2018 from 140bp in 2017, with a reinforcement of NPE coverage by loan-loss reserves to 50% from 42%, respectively

NPE coverage

Total coverage* ≥100%, for both individuals and companies, and for both NPE categories (NPL>90d and other NPE)

Coverage by loan-loss reserves is stronger in loans to companies, where real-estate collateral, usually more liquid and with a more predictable market value, accounts for a lower coverage than in loans to individuals: coverage by loanlosses was 58% for companies NPE as at December 31, 2018, reaching 67% for companies NPL>90d (78% and 90%, respectively, if cash, financial collateral and expected loss gap are included)

Foreclosed assets and corporate restructuring funds

2017 2018

3,852 4,758

• Net foreclosed assets were down by 17.9% between December 31, 2017 and year-end 2018. Valuation of foreclosed assets by independent providers exceeded book value by 27%
• 4,758 properties were sold during 2018, up from 3,852 properties in 2017, with capital gains increasing from €49 million in 2017 to €86 million in 2018
• Corporate restructuring funds decreased 1.5% to €1,007 million at year-end 2018. The original credit exposure on these funds totals €2,006 million, with total reserves (original credit, plus restructuring funds) corresponding to a 50% coverage

properties sold

Strong business dynamics leads to increased Customer funds and performing credit portfolio

(Billion euros)

*Deposits, debt securities, assets under management, assets placed with Customers and insurance products (savings and investments).

Credit now growing in Portugal

• Performing credit portfolio in Portugal expands by €1.1 billion (+3.7%) from December 31, 2017

• Strong performance of loans to companies, was up by €0.5 million, equivalent to 45% of the increase of the performing credit portfolio in Portugal from December 31, 2017, with new leasing and factoring business, up by 72.9% and by 21.8%, respectively, being particularly outstanding

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

³⁸

Positive contribution from international operations

(Million euros)

	2017	2018	Δ % local currency	Δ % euros	ROE	Capital ratio*
Poland	159.8	178.4	+11.7%	+11.3%	9.6%	23.8%
Mozambique	85.1	94.1	+10.5%	+10.5%	22.2%	39.0%
Angola**
Before IAS 29 impact	18.1	20.7
IAS 29 impact***	-18.1	0.8
Total Angola including IAS 29 impact	0.1	21.4
Other	8.8	13.3
Net income	253.8	307.2
Non-controlling interests (Poland and Mozambique)	-108.1	-120.4
Exchange rate effect(Poland and Mozambique)	0.5	--
Contribution from international operations	146.2	186.9		+27.8%

*Including earnings for the year. **Contribution of the Angolan operation. ***Includes goodwill impairment (-€12.6 million) and contribution revaluation (+€13.4 million). Subsidiaries' net income presented for 2017 at the same exchange rate as of 2018 for comparison purposes.

39

Growing net income

FX effect excluded. €/Zloty constant at December 2018 levels: Income Statement 4.26348333; Balance Sheet 4.2966. | *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 (€14.2 million in 2018 and €9.5 million in 2017) is presented in net trading income.

Increased net interest income

*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 (€14.2 million in 2018 and €9.5 million in 2017) is presented in net trading income. FX effect excluded. €/Zloty constant at December 2018 levels: Income Statement 4.26348333; Balance Sheet 4.2966.

41

Credit quality

FX effect excluded. €/Zloty constant at December 2018 levels: Income Statement 4.26348333; Balance Sheet 4.2966.

Growing volumes

(Million euros)

FX effect excluded. €/Zloty constant at December 2018 levels: Income Statement 4.26348333; Balance Sheet 4.2966.

Growing net income

FX effect excluded. €/Metical constant at December 2018 levels: Income Statement 71.64625000; Balance Sheet 70.5000.

Growing income partially offset by the increase in operating costs

FX effect excluded. €/Metical constant at December 2018 levels: Income Statement 71.64625000; Balance Sheet 70.5000.

Credit quality performance influenced by challenging environment

Business volumes reflect a conservative approach under a challenging environment

FX effect excluded. €/Metical constant at December 2018 levels: Income Statement 71.64625000; Balance Sheet 70.5000.

Agenda

• Highlights
• Group
• Profitability
• Business activity
• Capital
• Portugal
• International operations
• Key figures

Key figures Consolidated

		2017	2018	2021
	Active Customers	4.5 million	4.9 million	>6 million
Franchise growth	Digital Customers	49%	55%	>60%
	Mobile Customers	26%	34%	>45%
	Cost to Income	43% (44% excluding non-usual items)	47% (46% excluding non-usual items)	≈40%
	RoE CET1 Loans to Deposits Dividend Payout NPE stock Asset quality Cost of risk	3.3%	5.2%	≈10%
Value creation		11.9%	12.0%*	≈12%
		93%	87%	<100%
		--	10% Executive Committee proposal	≈40%
		€7.7 billion	€5.5 billion	≈€3 billion down by ≈60% from 2017
		122 bp	92 bp	<50 bp

Awards in 2018

Millennium bcp: Best Consumer Digital Bank in Portugal; Best Online Deposit, Credit and Investment Product Offerings in Western Europe; Best Information Security and Fraud Management in Western Europe for both individuals and companies banking sites

Millennium bim: Best Digital Bank in Mozambique

Millennium bim: Best Trade Finance Provider in Mozambique

Millennium bim: Best bank in Mozambique

Bank Millennium: #1 in Mobile Banking, #2 in Bank for Mr. Kowalski (traditional banking) and #3 in Internet Banking and in Mortgage Banking (Newsweek's Friendly Bank 2018)

Millennium bcp: Marketeer award, "Banking" category

Millennium bcp: the new Millennium Teller Machine (MTM) was considered one of the Best ATM/Self-Service Experiences in the world. Only European bank distinguished

ActivoBank: Best Commercial Bank in Portugal

ActivoBank: brand with best reputation, "online banking" category (Marktest Reputation Index)

ActivoBank: Consumer Choice 2019, "Digital

Millennium bcp: Best Private Bank in Portugal

Banks" category

ActivoBank: Best financial services site/app

Millennium bcp: Most satisfied Customers with digital channels (CSI Banca, 2nd wave); highest satisfaction overall, most satisfied with account manager, most satisfied with digital channels (Basef Banca, December 2018)

Millennium bcp: Most digital bank, best overall image, highest loyal Customers percentage, most attractive to non-Customers

Millennium bcp Consumer Choice 2019, "Large Banks" category

Barómetro Financeiro 2018

Millennium bcp Best Bank for Companies; Most Appropriate Products; Most Innovating; Most Efficient; Closest to Customers

Millennium bcp Best investment bank in Portugal

Appendix

⁵¹

Sovereign debt portfolio

• The sovereign debt portfolio totalled €13.1 billion, €10.5 billion of which maturing until 5 years
• The Portuguese sovereign debt portfolio totalled €6.6 billion, whereas the Polish and Mozambican portfolios amounted to €4.9 billion and to €0.7 billion, respectively; "other" includes Spanish sovereign debt of €0.6 billion and US sovereign debt of €0.2 billion

52

Sovereign debt portfolio

(Million euros)

	Portugal	Poland	Mozambique	Other	Total
Trading book*	37	161	0	0	198
≤ 1 year	0	3	0	0	3
> 1 year and ≤ 2 years	33	8	0	0	41
> 2 years and ≤ 5 years	2	115	0	0	118
> 5 years and ≤ 8 years	1	33	0	0	34
> 8 years and ≤ 10 years	0	3	0	0	3
> 10 years	0	0	0	0	0
Banking book**	6,572	4,764	698	858	12,892
≤ 1 year	854	51	504	676	2,085
> 1 year and ≤ 2 years	19	1,573	22	31	1,646
> 2 years and ≤ 5 years	3,594	2,877	65	103	6,638
> 5 years and ≤ 8 years	1,924	249	0	0	2,173
> 8 years and ≤ 10 years	176	13	37	49	275
> 10 years	5	1	70	0	76
Total	6,609	4,925	698	859	13,091
≤ 1 year	854	54	504	676	2,088
> 1 year and ≤ 2 years	53	1,580	22	31	1,687
> 2 years and ≤ 5 years	3,596	2,992	65	103	6,755
> 5 years and ≤ 8 years	1,925	282	0	0	2,207
> 8 years and ≤ 10 years	176	16	37	49	278
> 10 years	5	1	70	0	76

*Includes financial assets held for trading at fair value through net income (€33 million).

**Includes financial assets at fair value through other comprehensive income (€12,131 million) and financial assets at amortised cost (€761 million).

Diversified and collateralised portfolio

Loans

• Loans to companies accounted for 46% of the loan portfolio as at December 31, 2018, including 7% to construction and real-estate sectors
• Mortgage accounted for 47% of the loan portfolio, with low delinquency levels and an average LTV of 66%
• 87% of the loan portfolio is collateralised

Collaterals

• Real estate accounts for 93% of total collateral value
• 80% of the real estate collateral is residential

Consolidated earnings

(million euros)	2017	2018	YoY	Impact on earnings
Net interest income	1,391.3	1,423.6	+2.3%	+32.4
Net fees and commissions	666.7	684.0	+2.6%	+17.3
Other income*	139.5	78.9	-43.5%	-60.6
Banking income	2,197.5	2,186.5	-0.5%	-11.0
Staff costs	-526.6	-592.8	+12.6%	-66.2
Other administrative costs and depreciation	-427.6	-434.4	+1.6%	-6.8
Operating costs	-954.2	-1,027.2	+7.7%	-73.0
Operating net income (before impairment and provisions)	1,243.3	1,159.3	-6.8%	-84.0
Loans impairment (net of recoveries)	-623.7	-465.9	-25.3%	+157.8
Other impairment and provisions	-301.1	-135.2	-55.1%	+165.9
Impairment and provisions	-924.8	-601.1	-35.0%	+323.7
Net income before income tax	318.5	558.2	+75.3%	+239.7
Income taxes	-30.2	-138.0	+357.6%	-107.9
Non-controlling interests	-103.2	-117.8	+14.2%	-14.6
Net income from discontinued or to be discontinued operations	1.2	-1.3	-207.6%	-2.5
Net income	186.4	301.1	+61.5%	+114.7

*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.

Consolidated balance sheet

	31 December 2018	31 December 2017
ASSETS Cash and deposits at Central Banks	2,753.8	2,167.9
Loans and advances to credit institutions repayable on demand	326.7	295.5
Financial assets at amortised cost
Loans and advances to credit institutions	890.0	1,065.6
Loans and advances to customers	45,560.9	45,626.0
Debt instruments	3,375.0	2,007.5
Financial assets at fair value through profit or loss
Financial assets held for trading	870.5	897.7
Financial assets not held for trading mandatorily at fair value through profit or loss	1,404.7	-
Financial assets designated at fair value through profit or loss	33.0	142.3
Financial assets at fair value through other comprehensive income	13,845.6	-
Financial assets available for sale	-	11,471.8
Financial assets held to maturity	-	411.8
Assets with repurchase agreement	58.3	-
Hedging derivatives	123.1	234.3
Investments in associated companies	405.1	571.4
Non-current assets held for sale	1,868.5	2,164.6
Investment property	11.1	12.4
Other tangible assets	461.3	490.4
Goodwill and intangible assets	174.4	164.4
Current tax assets	32.7	25.9
Deferred tax assets	2,916.6	3,137.8
Other assets	811.8	1,052.0
TOTAL ASSETS	75,923.0	71,939.5

	31 December	31 December
	2018	2017
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions	7,752.8	7,487.4
Resources from customers	52,664.7	48,285.4
Non subordinated debt securities issued	1,686.1	2,066.5
Subordinated debt	1,072.1	1,169.1
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading	327.0	399.1
Financial liabilities at fair value through profit or loss	3,603.6	3,843.6
Hedging derivatives	177.9	177.3
Provisions	350.8	324.2
Current tax liabilities	18.5	12.6
Deferred tax liabilities	5.5	6.0
Other liabilities	1,300.1	988.5
TOTAL LIABILITIES	68,959.1	64,759.7
EQUITY
Share capital	4,725.0	5,600.7
Share premium	16.5	16.5
Preference shares	-	59.9
Other equity instruments	2.9	2.9
Legal and statutory reserves	264.6	252.8
Treasury shares	(0.1)	(0.3)
Reserves and retained earnings	470.5	(38.1)
Net income for the period attributable to Bank's Shareholders	301.1	186.4
TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS	5,780.5	6,080.8
Non-controlling interests	1,183.4	1,098.9
TOTAL EQUITY	6,963.9	7,179.7
	75,923.0	71,939.5

Consolidated income statement Per quarter

	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18
Net interest income	368.1	344.8	342.8	365.2	370.8
Dividends from equity instruments	0.1	0.1	0.6	0.0	0.0
Net fees and commission income	172.1	167.8	172.4	169.9	174.0
Other operating income	-5.2	-29.1	-61.0	1.7	-1.0
Net trading income	33.4	34.4	42.6	12.6	-11.0
Equity accounted earnings	34.8	19.8	21.6	30.5	17.3
Banking income	603.2	537.8	519.0	579.7	550.1
Staff costs	146.5	142.3	147.5	145.8	157.2
Other administrative costs	99.3	89.5	93.1	93.1	100.9
Depreciation	13.9	14.2	14.2	14.5	14.8
Operating costs	259.6	246.0	254.8	253.4	273.0
Operating net income bef. imp.	343.6	291.8	264.2	326.3	277.1
Loans impairment (net of recoveries)	165.1	106.1	114.8	116.3	128.8
Other impairm. and provisions	131.2	23.9	35.1	32.9	43.3
Net income before income tax	47.3	161.8	114.3	177.1	105.0
Income tax	-33.0	49.3	22.6	37.6	28.5
Non-controlling interests	27.1	26.9	28.5	30.5	31.9
Net income (before disc. oper.)	53.1	85.6	63.3	109.0	44.5
Net income arising from discont. operations	0.0	0.0	1.8	-2.2	-0.9
Net income	53.1	85.6	65.1	106.8	43.6

Income statement (Portugal and International Operations) For the 12-month period ended December 31st, 2017 and 2018

For the 12-month period ended December 31st, 2017 and 2018
(Million euros)												Internatio nal o	peratio	ns
		Gro up			P o rtugal			T o tal		B ank M	illennium (P	o land)	M	illennium bim (M	o z.)		Other int. o	peratio ns
	D ec 17	D ec 18	Δ %	D ec 17	D ec 18	Δ %	D ec 17	D ec 18	Δ %	D ec 17	D ec 18	Δ %	D ec 17	D ec 18	Δ %	D ec 17	D ec 18	Δ %
Interest income	1,914	1,890	-1.3%	1,054	991	-6.0%	860	899	4.5%	564	601	6.5%	289	285	-1.3%	6	13	94.1%
Interest expense	523	466	-10.9%	247	188	-23.9%	276	278	0.8%	165	175	5.7%	116	102	-12.1%	-5	2	>100%
N et interest inco me	1,391	1,424	2.3%	808	803	-0.6%	583	620	6.3%	399	426	6.8%	173	184	5.9%	11	10	-6.3%
Dividends from equity instruments	2	1	-63.7%	1	0	<-100%	1	1	0.4%	1	1	-0.7%	0	0	39.6%	0	0	-29.0%
Intermediatio n margin	1,393	1,424	2.2%	809	803	-0.7%	584	621	6.3%	400	427	6.8%	173	184	6.0%	11	11	-6.3%
Net fees and commission income	667	684	2.6%	456	475	4.3%	211	209	-1.1%	156	155	-0.7%	30	30	-1.6%	25	24	-3.3%
Other operating income	-102	-89	12.5%	-50	-32	35.5%	-52	-57	-9.6%	-61	-75	-22.7%	10	19	93.2%	0	0	-11.2%
B asic inco me	1,957	2,019	3.1%	1,214	1,246	2.6%	743	773	4.0%	494	507	2.5%	213	232	8.8%	3 5	3 4	-4.5%
Net trading income	148	79	-47.1%	85	12	-85.6%	63	66	5.2%	51	53	3.8%	11	10	-12.1%	1	4	>100%
Equity accounted earnings	92	89	-2.7%	52	55	6.4%	40	34	-14.5%	0	0	--	0	0	--	40	34	-14.5%
B anking inco me	2,197	2,187	-0.5%	1,352	1,314	-2.8%	846	873	3.2%	545	560	2.6%	224	242	7.8%	7 6	7 2	-6.2%
Staff costs	527	593	12.6%	332	386	16.2%	194	207	6.4%	140	150	6.7%	37	39	6.3%	17	18	4.8%
Other administrative costs	374	377	0.7%	222	219	-1.5%	152	158	3.9%	105	108	2.2%	40	44	8.5%	6	7	3.2%
Depreciation	54	58	7.8%	33	36	9.7%	20	21	4.7%	12	13	2.1%	8	8	8.2%	0	0	40.8%
Operating co sts	954	1,027	7.7%	588	641	9.1%	367	386	5.3%	258	270	4.6%	85	91	7.5%	23	25	4.6%
Operating net inco me bef. imp.	1,243	1,159	-6.8%	764	672	-12.0%	479	487	1.6%	287	289	0.8%	139	150	8.0%	5 3	4 7	-10.9%
Loans impairment (net of recoveries)	624	466	-25.3%	533	391	-26.7%	91	75	-16.8%	61	46	-23.9%	28	34	21.7%	2	-5	<-100%
Other impairm. and provisions	301	135	-55.1%	254	121	-52.5%	47	15	-69.2%	9	3	-67.2%	-1	-1	27.3%	40	13	-68.2%
N et inco me befo re inco me tax	318	558	75.3%	-23	161	>100%	341	397	16.3%	218	240	10.4%	112	117	4.2%	11	3 9	>100%
Income tax	30	138	>100%	-56	50	>100%	86	88	1.8%	57	62	7.9%	27	22	-16.6%	2	4	67.8%
Non-controlling interests	103	118	14.2%	-6	-5	23.8%	109	122	12.1%	0	0	--	1	1	15.8%	108	121	12.1%
N et inco me (befo re disc. o per.)	185	302	63.3%	3 9	116	>100%	146	187	27.8%	160	178	11.3%	8 5	9 4	10.5%	-99	-86	13.7%
Net income arising from discont. operations	1	-1	<-100%
N et inco me	186	301	61.5%

Glossary (1/2)

• Assets placed with customers amounts held by customers in the context of the placement of third-party products that contribute to the recognition of commissions.
• Balance sheet customer funds deposits and other resources from customers and debt securities placed with customers.
• 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 net interest income plus net fees and commissions income deducted from operating costs.
• Cost of risk, net (expressed in basis points) ratio of loan impairment charges for loans to customers at amortised cost and debt instruments at amortised cost related to credit operations (net of recoveries) accounted in the period to loans to customers at amortised cost and debt instruments at amortised cost related to credit operations before impairment.
• Cost to core income operating costs divided by core income.
• Cost to income operating costs divided by net operating revenues.
• Coverage of non-performing exposures by impairments loans impairments (balance sheet) divided by the stock of NPE.
• Coverage of non-performing loans by impairments loans impairments (balance sheet) divided by the stock of NPL.
• Coverage of overdue loans by impairments loans impairments (balance sheet) divided by overdue loans.
• Coverage of overdue loans by more than 90 days by impairments loans impairments (balance sheet) divided by overdue loans by more than 90 days.
• Debt instruments non-subordinated debt instruments at amortised cost and financial liabilities measured at fair value through profit or loss (debt securities and certificates).
• Debt securities placed with customers debt securities issued by the Bank and placed with customers.
• Deposits and other resources from customers resources from customers at amortised cost and customer deposits at fair value through profit or loss.
• 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 and, until 2017, financial assets 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. Insurance products – includes unit linked saving products and retirement saving plans ("PPR", "PPE" and "PPR/E").
• Loans impairment (balance sheet) balance sheet impairment related to loans to customers at amortised cost, balance sheet impairment associated with debt instruments at amortised cost related to credit operations and fair value adjustments related to loans to customers at fair value through profit or loss.
• Loans impairment (P&L) impairment of financial assets at amortised cost for loans and advances of credit institutions, for loans to customers (net of recoveries principal and accrual) and for debt instruments related to credit operations.
• Loans to customers (gross) loans to customers at amortised cost before impairment, debt instruments at amortised cost associated to credit operations 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, debt instruments at amortised cost associated to credit operations 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 deposits and other resources from customers.
• 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, other net operating income and equity accounted earnings.

Glossary (2/2)

• Net trading income results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting operations, results from derecognition of financial assets and financial liabilities measured at amortised cost, results from derecognition of financial assets measured at fair value through other comprehensive income and results from financial assets available for sale (till 2017).
• Non-performing exposures (NPE) non-performing loans and advances to customers (loans to customers at amortised cost and loans to customers at fair value through profit or loss) more than 90 days past-due or unlikely to be paid without collateral realisation, if they recognised as defaulted or impaired.
• Non-performing loans (NPL) overdue loans (loans to customers at amortised cost, debt instruments at amortised cost associated to credit operations and loans to customers at fair value through profit or loss) more than 90 days past due including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining principal.
• Off-balance sheet customer funds assets from customers under management, assets placed with customers and insurance products (savings and investment) subscribed by customers.
• Operating costs staff costs, other administrative costs and depreciation.
• Other impairment and provisions impairment of financial assets (at fair value through other comprehensive income, at amortised cost not associated with credit operations and available for sale, in this case till 2017), other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, investments in associated companies and goodwill of subsidiaries and other provisions.
• Other net income dividends from equity instruments, net commissions, net trading income, other net operating income 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 total outstanding amount of past due loans to customers (loans to customers at amortised cost, debt instruments at amortised cost associated to credit operations and loans to customers at fair value through profit or loss), including principal and interests.
• Overdue loans by more than 90 days total outstanding amount of past due loans to customers by more than 90 days (loans to customers at amortised cost, debt instruments at amortised cost associated to credit operations and loans to customers at fair value through profit or loss), including principal and interests.
• Resources from credit institutions resources and other financing from Central Banks and resources from other credit institutions.
• Return on average assets (Instruction from the Bank of Portugal no. 16/2004) net income (before tax) divided by the average total assets (weighted average of the average of monthly net assets in the period).
• Return on average assets (ROA) net income (before minority interests) divided by the average total assets (weighted average of the average of monthly net assets in the period).
• 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 (weighted average of the average of monthly equity in the period).
• Return on equity (ROE) net income (after minority interests) divided by the average attributable equity, deducted from preference shares and other capital instruments (weighted average of the average of monthly equity in the period).
• Securities portfolio debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income (net of impairment), assets with repurchase agreement, financial assets available for sale and financial assets held to maturity (in the latter two cases until 2017).
• 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 and off-balance sheet customer fund.