Banco Comercial Portugues

Earnings Release • Nov 8, 2018

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.

First 9 months figures for 2018 and 2017 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

• Improved profitability, with net earnings of €257.5 million in the first 9 months of 2018 1
• Improved credit quality, with NPEs decreasing by €1.8 billion from September 30, 2017 2
• Increasing business volumes in the third quarter of 2018, with total loans up by approximately €700 million and performing loans up by €1.0 billion 3
• +294,000 active Customers from September 30, 2017 4
• Recent rating actions (Standard & Poor's e Moody's) recognise Millennium bcp's improvement over the last years 5
• Good performance on stress tests when compared to the average for banks tested 6
• Agreement for the acquisition of eurobank strengthens Bank Millennium's market position in Poland and provides opportunity for strong value creation

7

⁴

Highlights

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

Highlights

Recent rating actions recognise Millennium bcp's improvement over the last years

Good performance on stress tests when compared to the average for banks tested ⁶

Outcome of the stress tests 2018

Adverse scenario

		Change 2017-2020
CET1 ratio	BCP	Avg. for the EBA tested 48 banks
Phased-in	-384 bp	-410 bp
Fully implemented	-300 bp	-395 bp

• Millennium bcp's CET1 phased-in ratio aggravated 384 basis points from end-2017 under the adverse scenario, comparing favourably to an average 410 basis points aggravation for the 48 banks tested by EBA
• Under a fully implemented basis, Millennium bcp's CET1 ratio aggravated 300 basis points, comparing favourably to an average 395 basis points aggravation for the 48 banks tested by EBA

5

Agreement for the acquisition of eurobank in Poland materialises renewed growth ambition ⁷

Agenda

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

⁸

Improved profitability across geographies

Profit of €257.5 million in the first 9 months of 2018

(million euros)	9M17	9M18	YoY	Impact on earnings
Net interest income	1,023.2	1,052.8	+2.9%	+29.6
Commissions	494.6	510.1	+3.1%	+15.4
Core income	1,517.8	1,562.9	+3.0%	+45.0
Other income*	76.5	71.7	-6.2%	-4.8
Operating costs	-694.6	-754.2	+8.6%	-59.6
Of which: recurring	-718.3	-742.2	+3.3%	-23.9
Of which: non-usual items (staff costs)	23.7	-12.0		-35.7
Operating net income	899.7	880.3	-2.2%	-19.4
Of which: recurring	876.0	892.3	+1.9%	+16.4
Impairment and provisions	-628.5	-431.4	-31.4%	+197.2
Net income before income tax	271.2	449.0	+65.6%	+177.8
Income taxes, non-controlling interests and discotinued operations	-137.9	-191.5	+38.9%	-53.6
Net income	133.3	257.5	+93.1%	+124.2

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

Strong performance of net interest income

11

Commissions boosted by increased business volumes

Fees and commissions	Consolidated
	9M17	9M18	YoY
Banking fees and commissions	408.5	418.3	+2.4%
Cards and transfers	115.3	122.3	+6.1%
Loans and guarantees	117.9	121.6	+3.2%
Bancassurance	71.4	71.7	+0.4%
Customer account related	77.8	79.1	+1.6%
Other fees and commissions	26.1	23.6	-9.7%
Market related fees and commissions	86.2	91.8	+6.5%
Securities operations	54.7	59.0	+7.7%
Asset management	31.4	32.8	+4.4%
Total fees and commissions	494.6	510.1	+3.1%

Other income* influenced by mandatory contributions and 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

¹⁸

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 loan portfolio

20

Comfortable liquidity position

Agenda

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

²²

Adequate capital position

• CET1 capital ratio of 11.8% (fully implemented)
• Increase from a 11.7% as of September 30, 2017 due to earnings for the last 4 quarters (+80bp), partially offset by the impact of the IFRS9 adoption, by negative FX effects and by increased risk-weighted assets
• Increase from 11.7% as of June 30 due to earnings for the quarter, partially offset by increased risk-weighted assets
• Total capital ratio of 13.4% (fully implemented), boosted by the €300 million subordinated debt (tier 2) issued in December 2017

Capital at adequate levels

Agenda

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

²⁵

Increased net income

Net interest income

• Net interest income increased from €591.8 million in the first 9 months of 2017 to €595.8 million in the same period of 2018. The favourable impacts of a lower wholesale funding cost; of the continued decline in the remuneration of time deposits; and of the repayment of CoCos were partially offset by the negative effects of the securities portfolio (increased balance yielding lower interest, reflecting lower sovereign yields from the end of the first 9 months of 2017); of lower average credit volumes, largely reflecting the emphasis on the reduction of NPEs (unlikely to pay); and of lower credit yields, reflecting the normalisation of the macro-economic environment
• Net interest income increased from €192.8 million in the second quarter to €211.1 million in the third quarter of 2018. In addition to the positive impacts from a lower wholesale funding cost; from the securities portfolio; from a larger number of days (92 days in the third quarter, 91 days in the second) and of the declining remuneration of time deposits, net interest income for the quarter also benefited from a growing credit portfolio, reflected in a positive volume effect already from the third quarter

Continued effort to reduce the cost of deposits

Commissions and other income*

(Million euros)

Fees and commissions				Other income*
	9M17	9M18	YoY
Banking fees and commissions	293.0	303.1	+3.5%
Cards and transfers	78.5	81.9	+4.4%
Loans and guarantees	77.9	79.1	+1.5%
Bancassurance	58.8	60.7	+3.2%
Customer account related	69.3	70.8	+2.1%
Other fees and commissions	8.4	10.6	+26.1%
Market related fees and commissions	44.7	49.4	+10.4%
Securities operations	39.8	44.4	+11.4%
Asset management	4.9	5.0	+2.3%
Total fees and commissions	337.7	352.5	+4.4%

• Growing commissions in Portugal, in all lines, with income related to markets (brokerage, in particular) and to investment banking activity standing out
• Decreased other income due to lower trading income (which includes -€21.6 million in sales of credit, compared to -€4.8 million in the first 9 months of 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 €5.5 billion as of September 30, 2018, a €1.2 billion reduction from year-end 2017
• This decrease is attributable to a €734 million NPL> 90d reduction and to a €474 million reduction of other NPE
• NPE total coverage* of 107%, broken down as follows:
• coverage by loan-loss reserves of 48%
• coverage by real estate collateral of 44%
• coverage by financial collateral of 14%
• coverage by expected loss gap of 1%
• NPE net from loan-loss reserves were down to €2.9 billion as of September 30, 2018 from € 9.8 billion at year-end 2013

Lower NPEs, with reinforced coverage

Non-performing exposures (NPEs)			NPE build-up
	7,168	-22.6% 5,546		Sep 18 vs.Sep 17	Sep 18 vs.Jun 18
Other NPE	2,913	2,222	Opening balance +/- Net exits	7,168 -717	5,913 -91
NPL>90d	4,255	3,324	- Write-offs - Sales	-401 -504	-131 -145
	Sep 17	Sep 18	Ending balance	5,546	5,546
Loan impairment Cost of risk	137bp 390.0	(net of recoveries) 102bp 288.5	 NPE in Portugal down by €1.6 billion, from €7.2 billion as at September 30, 2017 to €5.5 billion as at the same date of 2018  This decrease results from net outflows of €0.7 billion, sales of €0.5 billion and write-offs of €0.4 billion  The decrease of NPE from September 30, 2017 is attributable to a €0.9 billion reduction of NPL>90d and to a €0.7 billion decrease of other NPE
Loan-loss reserves	9M17 2,932	9M18 2,684	 Significant NPE reduction in the quarter, from €5.9 billion as at June 30 to €5.5 billion as at September 30, 2018  Reduction of the cost of risk to 102bp in the first 9 months of 2018 from 137bp in the same period of 2017, with a reinforcement of NPE coverage by loan-loss reserves to 48% from 40%, 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 loan-losses was 56% for companies NPE as at September 30, 2018, reaching 63% for companies NPL>90d (75% and 85%, respectively, if cash, financial collateral and expected loss gap are included)

Foreclosed assets and corporate restructuring funds

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 €1.3 billion (+4.2%) from September 30, 2017
• This increase was chiefly the result of the strong performance of loans to companies, which was up by €0.8 billion, equivalent to 65% of the increase of the performing credit portfolio in Portugal from September 30, 2017, with new leasing and factoring business, up by 76.9% and by 23.0%, respectively, being particularly outstanding

Agenda

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

38

Positive contribution from international operations

(Million euros)

	9M17	9M18	Δ % local currency	Δ % euros	ROE
Poland	118.0	129.0	+9.3%	+9.5%	9.5%
Mozambique	60.2	72.3	+20.0%	+19.4%	23.5%
Angola*
Before IAS 29 impact	16.2	15.5
IAS 29 impact**	--	1.6
Total Angola including IAS 29 impact	16.2	17.1	+5.6%	-29.8%
Other	7.3	10.9	+49.4%	+44.1%
Net income	201.7	229.2	+13.6%	+9.0%
Non-controlling interests Poland and Mozambique	-79.0	-88.4
Exchange rate effect	8.5	--
Contribution from international operations	131.3	140.8		+7.2%
Same as above without FX effect and IAS 29 (Angola)	122.8	139.2		+13.4%

*Contribution of the Angolan operation.

**Includes goodwill impairment (-€11.6 million) and contribution revaluation (+€13.2 million).

Subsidiaries' net income presented for 2017 at the same exchange rate as of 2018 for comparison purposes.

Growing net income

FX effect excluded. €/Zloty constant at September 2018 levels: Income Statement 4.24911667; Balance Sheet 4.2807. | *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 (€9.9 million in 2018 and €8.3 million in 2017) is presented in net trading income.

Increased net income and commissions

*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 (€9.9 million in 2018 and €8.3 million in 2017) is presented in net trading income. FX effect excluded. €/Zloty constant at September 2018 levels: Income Statement 4.24911667; Balance Sheet 4.2807.

Credit quality

FX effect excluded. €/Zloty constant at September 2018 levels: Income Statement 4.24911667; Balance Sheet 4.2807.

Growing volumes

(Million euros)

FX effect excluded. €/Zloty constant at September 2018 levels: Income Statement 4.24911667; Balance Sheet 4.2807.

Growing net income

Growing income partially offset by the increase in operating costs

FX effect excluded. €/Metical constant at September 2018 levels : Income Statement 72.22333333; Balance Sheet 71.1200.

Credit quality performance influenced by challenging environment

Business volumes reflect a conservative approach under a challenging environment

FX effect excluded. €/Metical constant at September 2018 levels : Income Statement 72.22333333; Balance Sheet 71.1200.

Agenda

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

48

Key figures Consolidated

		9M17	9M18	2021
	Total active Customers	4.5 million	4.8 million	>6 million
Franchise growth	Digital Customers	47%	55%	>60%
	Mobile Customers	24%	32%	>45%
	Cost to Income	44%	46%	≈40%
	RoE CET1		6.0%	≈10%
Value creation		11.7%	11.8%	≈12%
	Loans to Deposits	93%	89%	<100%
	Dividend Payout	--	--	≈40%
Asset quality	NPE stock	€8.1 billion	€6.3 billion	≈€3 billion down by ≈60% from 2017
	Cost of risk	120 bp	88 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 internet banking websites

Millennium bim: Best Digital Bank in Mozambique

Millennium bcp: Best investment bank in Portugal

Millennium bim: Best bank in Mozambique

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

Millennium bcp: winner of the 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

Millennium bcp Consumer Choice 2018, "Large Banks" category

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

Millennium bcp Best Private Bank in Portugal (The Banker, a publication of the Financial Times group)

Appendix

⁵¹

Sovereign debt portfolio

• The sovereign debt portfolio totalled €11.6 billion, €2.0 billion of which maturing within one year
• The Portuguese sovereign debt portfolio totalled €6.3 billion, whereas the Polish and Mozambican portfolios amounted to €4.0 billion and to €0.7 billion, respectively; "other" includes US sovereign debt of €0.3 billion and Spanish sovereign debt of €0.1 billion

52

Sovereign debt portfolio

(Million euros)

	Portugal	Poland	Mozambique	Other	Total
Trading book*	37	271	0	26	334
≤ 1 year	0	14	0	0	14
> 1 year and ≤ 2 years	33	17	0	26	76
> 2 years and ≤ 5 years	2	193	0	0	196
> 5 years and ≤ 8 years	2	42	0	0	44
> 8 years and ≤ 10 years	0	5	0	0	5
> 10 years	0	0	0	0	1
Banking book**	6,298	3,776	656	496	11,225
≤ 1 year	972	221	472	344	2,008
> 1 year and ≤ 2 years	19	1,337	40	0	1,395
> 2 years and ≤ 5 years	1,222	2,057	33	102	3,415
> 5 years and ≤ 8 years	3,880	149	0	2	4,031
> 8 years and ≤ 10 years	101	12	39	48	199
> 10 years	103	1	73	0	177
Total	6,335	4,047	656	522	11,560
≤ 1 year	972	235	472	344	2,022
> 1 year and ≤ 2 years	52	1,354	40	26	1,471
> 2 years and ≤ 5 years	1,225	2,250	33	103	3,611
> 5 years and ≤ 8 years	3,882	191	0	2	4,074
> 8 years and ≤ 10 years	101	17	39	48	204
> 10 years	103	1	73	1	177

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

**Includes financial assets at fair value through other comprehensive income (€10,511 million) and financial assets at amortised cost (€715 million).

Diversified and collateralised portfolio

Loans

• Loans to companies accounted for 46% of the loan portfolio as at September 30, 2018, including 7% to construction and real-estate sectors
• Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an average LTV of 66%
• 88% 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)	9M17	9M18	YoY	Impact on earnings
Net interest income	1,023.2	1,052.8	+2.9%	+29.6
Net fees and commissions	494.6	510.1	+3.1%	+15.4
Other income*	76.5	71.7	-6.2%	-4.8
Banking income	1,594.3	1,634.6	+2.5%	+40.3
Staff costs	-380.1	-435.6	+14.6%	-55.4
Other administrative costs and depreciation	-314.5	-318.7	+1.3%	-4.2
Operating costs	-694.6	-754.2	+8.6%	-59.6
Operating net income (before impairment and provisions)	899.7	880.3	-2.2%	-19.4
Of which: core net income**	823.2	808.6	-1.8%	-14.6
Loans impairment (net of recoveries)	-458.6	-337.1	-26.5%	+121.5
Other impairment and provisions	-169.9	-94.2	-44.5%	+75.7
Impairment and provisions	-628.5	-431.4	-31.4%	+197.2
Net income before income tax	271.2	449.0	+65.6%	+177.8
Income taxes	-63.1	-109.5	+73.5%	-46.4
Non-controlling interests	-76.0	-83.8	+10.2%	-7.7
Net income from discontinued or to be discontinued operations	1.3	1.8	+40.0%	+0.5
Net income	133.3	257.5	+93.1%	+124.2

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

**Core net income = net interest income + net fees and commission income - operating costs.

Consolidated balance sheet

(Million euros)

	30 september	30 september		30 september	30 september
	2018	2017		2018	2017
ASSETS			LIABILITIES
Cash and deposits at Central Banks	2,192.5	2,144.8	Financial liabilities at amortised cost
Loans and advances to credit institutions repayable on demand	330.3	1,113.4	Resources from credit institutions	7,563.5	9,185.5
Financial assets at amortised cost			Resources from customers	50,760.5	47,825.6
Loans and advances to credit institutions	868.2	805.3	Non subordinated debt securities issued	1,707.7	2,187.1
Loans and advances to customers	45,355.4	45,199.6	Subordinated debt	1,097.7	858.2
Debt instruments	3,347.7	2,167.5	Financial liabilities at fair value through profit or loss
Financial assets at fair value through profit or loss			Financial liabilities held for trading	310.6	461.8
Financial assets held for trading	1,024.8	922.7	Financial liabilities at fair value through profit or loss	3,831.9	3,773.8
Financial assets not held for trading mandatorily at fair value through profit or loss	1,405.5	-	Hedging derivatives	170.5	216.3
Financial assets designated at fair value through profit or loss	32.9	142.3	Provisions	331.9	341.0
Financial assets at fair value through other comprehensive income	12,063.8	-	Current tax liabilities	4.7	8.8
Financial assets available for sale	-	11,914.7	Deferred tax liabilities	5.0	2.2
Financial assets held to maturity	-	436.3	Other liabilities	1,015.9	1,071.3
Assets with repurchase agreement	15.5	71.0		66,800.0	65,931.7
Hedging derivatives	76.6	165.3	TOTAL LIABILITIES
Investments in associated companies	488.2	612.8	EQUITY
Non-current assets held for sale	1,940.0	2,286.1	Share capital	5,600.7	5,600.7
Investment property	12.0	14.2	Share premium	16.5	16.5
Other tangible assets	484.2	479.0	Preference shares	59.9	59.9
Goodwill and intangible assets	168.7	164.6	Other equity instruments	2.9	2.9
Current tax assets	12.9	7.6	Legal and statutory reserves	264.6	252.8
Deferred tax assets	2,945.3	3,135.2	Treasury shares	(0.3)	(0.3)
Other assets	980.0	1,207.4	Reserves and retained earnings	(393.2)	(14.0)
TOTAL ASSETS	73,744.6	72,989.7	Net income for the period attributable to Bank's Shareholders	257.5	133.3
			TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS	5,808.6	6,051.9
			Non-controlling interests	1,136.0	1,006.2
			TOTAL EQUITY	6,944.7	7,058.0
				73,744.6	72,989.7

Consolidated income statement Per quarter

3Q 17	4Q 17	1Q 18	2Q 18	3Q 18
344.7	368.1	344.8	342.8	365.2
0.1	0.1	0.1	0.6	0.0
164.3	172.1	167.8	172.4	169.9
-10.4	-5.2	-29.1	-61.0	-0.2
25.1	33.4	34.4	42.6	12.6
21.7	34.8	19.8	21.6	30.5
545.5	603.2	537.8	519.0	577.8
138.6	146.5	142.3	147.5	145.8
92.2	99.3	89.5	93.1	93.1
13.6	13.9	14.2	14.2	14.5
244.4	259.6	246.0	254.8	253.4
301.1	343.6	291.8	264.2	324.4
153.6	165.1	106.1	114.8	116.3
59.6	131.2	23.9	35.1	35.3
87.9	47.3	161.8	114.3	172.8
19.7	-33.0	49.3	22.6	37.6
24.8	27.1	26.9	28.5	28.4
43.4	53.1	85.6	63.3	106.8
0.0	0.0	0.0	1.8	0.0
43.4	53.1	85.6	65.1	106.8

Income statement (Portugal and International Operations) For the 9-month periods ended September 30th, 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
	Sep 17	Sep 18	Δ %	Sep 17	Sep 18	Δ %	Sep 17	Sep 18	Δ %	Sep 17	Sep 18	Δ %	Sep 17	Sep 18	Δ %	Sep 17	Sep 18	Δ %
Interest income	1,432	1,408	-1.7%	793	741	-6.6%	638	667	4.5%	419	443	5.8%	215	215	-0.2%	5	10	>100%
Interest expense	409	355	-13.1%	202	145	-28.1%	207	210	1.5%	125	129	3.9%	86	79	-8.9%	-4	2	>100%
N et interest inco me	1,023	1,053	2.9%	592	596	0.7%	431	457	5.9%	294	313	6.6%	129	136	5.6%	9	8	-11.2%
Dividends from equity instruments	2	1	-64.9%	1	0	<-100%	1	1	-1.0%	1	1	-2.2%	0	0	38.8%	0	0	-29.0%
Intermediatio n margin	1,025	1,053	2.8%	593	596	0.5%	432	458	5.9%	295	314	6.6%	129	136	5.6%	9	8	-11.2%
Net fees and commission income	495	510	3.1%	338	352	4.4%	157	158	0.4%	116	118	1.3%	23	22	-4.4%	18	18	0.4%
Other operating income	-97	-90	6.9%	-54	-46	15.0%	-43	-45	-3.2%	-48	-58	-21.9%	5	14	>100%	0	0	-13.5%
B asic inco me	1,423	1,473	3.6%	877	903	2.9%	546	570	4.5%	363	373	2.9%	156	172	9.8%	2 6	2 5	-3.5%
Net trading income	115	90	-22.1%	69	42	-40.1%	46	48	5.1%	37	39	6.7%	8	6	-30.0%	0	3	>100%
Equity accounted earnings	57	72	26.5%	32	43	33.1%	24	29	17.8%	0	0	--	0	0	--	24	29	17.8%
B anking inco me	1,594	1,635	2.5%	979	987	0.9%	616	647	5.1%	400	413	3.2%	165	177	7.8%	5 1	5 7	11.2%
Staff costs	380	436	14.6%	235	281	19.5%	145	154	6.5%	104	112	7.7%	28	29	2.1%	13	13	6.4%
Other administrative costs	275	276	0.4%	164	161	-2.1%	111	115	4.0%	76	79	3.8%	30	31	4.4%	5	5	4.9%
Depreciation	40	43	8.0%	25	27	10.6%	15	16	3.9%	9	9	0.3%	6	6	9.2%	0	0	27.7%
Operating co sts	695	754	8.6%	424	469	10.6%	271	285	5.4%	190	201	5.8%	64	66	3.8%	17	19	6.1%
Operating net inco me bef. imp.	900	880	-2.2%	555	518	-6.5%	345	362	4.9%	210	212	0.9%	101	111	10.3%	3 4	3 9	13.9%
Loans impairment (net of recoveries)	459	337	-26.5%	390	289	-26.0%	69	49	-29.2%	45	32	-28.8%	23	22	-6.0%	0	-5	<-100%
Other impairm. and provisions	170	94	-44.5%	168	79	-53.4%	1	16	>100%	4	5	13.8%	-3	-1	74.6%	0	12
N et inco me befo re inco me tax	271	449	65.6%	- 4	151	>100%	275	298	8.3%	161	175	8.9%	8 1	9 0	12.1%	3 3	3 2	-3.8%
Income tax	63	110	73.5%	-1	43	>100%	64	67	4.2%	43	46	7.2%	19	17	-10.2%	2	3	>100%
Non-controlling interests	76	84	10.2%	-3	-6	-81.8%	80	90	13.3%	0	0	--	1	1	1.1%	79	90	13.4%
N et inco me (befo re disc. o per.)	132	256	93.6%	1	115	>100%	131	141	7.2%	118	129	9.5%	6 1	7 2	19.4%	-47	-60	-28.7%
Net income arising from discont. operations	1	2	40.0%
N et inco me	133	257	93.1%

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.