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Banco Comercial Portugues

Investor Presentation Oct 23, 2018

1913_iss_2018-10-23_190c208d-21ee-4d8a-a5dc-5eb4eb59635c.pdf

Investor Presentation

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Banco BPI

Consolidated resultsat 30 September 2018

23 October 2018

Discontinued operations in accordance with IFRS 5

In accordance with IFRS 5 ‐ Non‐current assets held for sale and discontinued operations, BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF were classified as discontinued operations on December 31, 2017, following the signature of the sale contracts disclosed to the market on November 23, 2017.

Consequently, the assets and liabilities of these units are presented in the consolidated balance sheet of Banco BPI under the captions "Non‐current assets / liabilities held for sale and discontinued operations" and the respective contribution to consolidated results is presented under the caption "Results of discontinued operations".

Adoption of a new structure of the financial statements

With the entry into force of IFRS 9, in the beginning of 2018, Banco BPI decided to adopt a structure of the individual and consolidated financial statements in line with the guidelines of Regulation (EU) 2017/1443 of June 29, 2017 and with the structure of the financial statements presented by CaixaBank (the consolidating entity of Banco BPI).

Reclassification of costs from General Administrative Costs to Commissions paid

Until 31 December 2017, Banco BPI followed the Chart of Accounts of Banco of Portugal defined in Instruction 9/2005, which specified the inclusion of some costs in General Administrative Costs. Taking into account the revocation of the instruction and the integration / alignment of accounting policies with CaixaBank, costs that depend on the evolution of the business and which have as a counterpart a benefit charged to the clients, were reclassified from General Administrative Costs to Commissions paid.

Profit and loss account of 2017 proforma

The items in the profit and loss account of 2017 (and respective quarters) were restated (Proforma figures) recognizing the contribution of BPI Vida e Pensões, BPI Gestão de Ativos and BPI GIF to the consolidated results in accordance with IFRS 5, the adoption of a new structure of the financial statements, with the entry into force of IFRS 9, as well as the reclassification of costs from General Administrative Costs to Commissions paid as mentioned above.

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Units, conventional signs and abbreviations

"Disclaimer"

The purpose of this presentation is purely informative and should not be considered as a service or offer of any financial product, service or advice, nor should it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities issued by Banco BPI ("BPI") or any of the companies mentioned herein. The information contained herein is subject to, and must be read in conjunction with, all other publicly available information. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information set out in the relevant documentation filed by the issuer, having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in this presentation.

BPI cautions that this presentation might contain forward‐looking statements concerning the development of its business and economic performance. While these statements are based on BPI's current projections, judgments and future expectations concerning the development of the Bank's business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from BPI's expectations. Such factors include, but are not limited to the market general situation, macroeconomic factors, regulatory, political or government guidelines and trends, movements in domestic and international securities markets, currency exchange rates and interest rates, changes in the financial position, creditworthiness or solvency of BPI customers, debtors or counterparts.

Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, future share price or future earnings for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. In addition, it should be noted that although this presentation has been prepared based on accounting registers kept by BPI and by the rest of the Group companies it may contain certain adjustments and reclassifications in order to harmonize the accounting principles and criteria followed by such companies with those followed by BPI.

In particular, regarding the data provided by third parties, neither BPI, nor any of its administrators, directors or employees, either explicitly or implicitly, guarantees that these contents are exact, accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case that any deficiency, error or omission were to be detected. Moreover, in reproducing these contents by any means, BPI may introduce any changes it deems suitable, may omit partially or completely any of the elements of this document, and in case of any deviation between such a version and this one, BPI assumes no liability for any discrepancy.

In relation to Alternative Performance Measures (APMs) as defined in the guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415), this report uses certain APMs, which have not been audited, for a better understanding of the company's financial performance. These measures are considered additional disclosures and in no case replace the financial information prepared under the International Financial Reporting Standards (IFRS). Moreover, the way the Group defines and calculates these measures may differ to the way similar measures are calculated by other companies. Accordingly, they may not be comparable. Please refer to the Glossary section for a list of the APMs used along with the relevant reconciliation between certain indicators.

This document has not been submitted to the Comissão do Mercado of Valores Mobiliários (CMVM) (Autoridade Portuguesa do Mercado of Capitais) for review or for approval. Its content is regulated by the Portuguese law applicable at the date hereto, and it is not addressed to any person or any legal entity located in any other jurisdiction. For this reason it may not necessarily comply with the prevailing norms or legal requisites as required in other jurisdictions.

Notwithstanding any legal requirements, or any limitations imposed by BPI which may be applicable, permission is hereby expressly refused for any type of use or exploitation of the content of this presentation, and for any use of the signs, trademarks and logotypes contained herein. This prohibition extends to any kind of reproduction, distribution, transmission to third parties, public communication or conversion by any other mean, for commercial purposes, without the previous express consent of BPI and/or other respective proprietary title holders. Any failure to observe this restriction may constitute a legal offence which may be sanctioned by the prevailing laws in such cases.

Index

du
In
tro
to
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ry
n
o
s
2
la
D
isc
im
er
3

Results in 30 September 2018

h
l
h
1.
H
i
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s
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l
2.
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An
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s
3
4

BPI consolidated results at 30 September 2018

Recurring net income increases in Portugal and in the consolidated

Strong growth in deposits and loans in Portugal

High asset quality

Upgrade in ratings BPI's long‐term debt reaches investmentgrade by Fitch, Moody's and S&P

  • Consolidated net profit of 529.1 M.€ in Sep. 2018
  • Net profit in Portugal of 324.4 M.€ in Sep. 2018
  • Recurring net profit in Portugal of 164.2 M.€1), increases 20% yoy
  • Customer deposits grow 1 343 M.€ (+6.9% ytd)
  • Loans to companies in Portugal increase 846 M.€ (+12.0% ytd)
  • Non‐performing exposures ratio ‐ NPE2 (EBA criteria) of 3.8% in Sep.18, improves 1.3 p.p. over Dec.17
  • Coverage by impairments and collateral of non‐performing exposures (NPE) of 126%
  • Fully loaded capital ratios: CET1 of 13.1% and total of 14.8%
  • Fully loaded leverage ratio of 7.2% Strong capitalisation
  • Moody's (16 Oct.) upgraded by 2 notches BPI's long‐term debt rating from Ba1 to Baa2 and the long‐term deposits rating from Baa3 to Baa1, with a stable Outlook
  • Fitch (11 Oct.) upgraded by 1 notch BPI's long‐term debt rating, from BBB‐ to BBB, with a stable Outlook
  • S&P (9 Oct.) upgraded by 2 notches BPI's standalone rating, from bb‐ to bb+, and reaffirmed the BBB‐ long‐term debt rating, with a positive Outlook.

2) According to EBA (European Banking Authority) criteria; considering the prudential supervision perimeter.

1) Excluding non recurring gains of 160.2 M.€: gain of 60 M.€ with the sale of the stake in Viacer; gain of 62 M.€ with the sale of subsidiaries (BPI Gestão de Ativos and BPI GIF), gain of 42 M.€ with the sale of acquiring / POS businesses, cost of 5.5 M.€ (after taxes) with early retirements and results from discontinued operations of 2.5 M.€.

Consolidated net profit of 529.1 M.€

CONSOLIDATED RESULTS

Consolidated net profit of 529.1 M.€ from Jan‐Sep 2018

Activity in Portugal contributes 61% to consolidated profit

I
M

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1)Non recurring impacts:

In 30 September 2017 ‐ negative impact of 212 M.€ from the sale of 2% of BFA and deconsolidation (of which ‐182 M.€ corresponded to the transfer to net income of accumulated negative foreign exchange reserves that resulted from the translation of BFA financial statements from AKZ to EUR), cost of 76 M.€ (after taxes) with early retirements and voluntary terminations and results from discontinued operations of 14 M.€.

In 30 September 2018‐ gain of 60 M.€ with the sale of the stake in Viacer, gain of 62 M.€ with the sale of subsidiaries (BPI Gestão de Ativos e BPI GIF), gain of 42 M.€ with the sale of acquiring / POS businesses, cost of 5.5 M.€ (after taxes) with early retirements and results from discontinued operations of 2.5 M.€.

Recurring net income in Portugal increases 20% yoy to 164.2 M.€

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Cards issuance

1) After taxes. 2) Estimated capital gain of 41 M.€ before taxes.

Contribution from BFA and BCI of 204.6 M.€

C
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Contribution from BFA of 193.7 M.€ in Sep. 18, includes impacts from the recognition of the stake in BFA in accordance with IAS 29 and from the depreciation of AKZ.

Until Sep. 18, the Angolan local currency (AKZ) depreciated by 46% against the Euro, and BFA recorded significant non recurring gains with financial operations, 145.4 M.€ of which were appropriated by BPI (after taxes). That amount compares with an average value appropriated by BPI in 2017 of 18 M.€ for 9 months.

Contribution of BCI of 10.8 M.€ in Sep. 18.

1) Includes results booked in earnings of associated companies (equity method) (221 M.€), net income on financial operations (‐8 M.€) and income taxes (20 M.€).

2) Contribution of BPI Moçambique and BPI Capital África.

Impact of AKZ devaluation on the evolution of the value of stake in BFA

E
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1) Change in the AKZ value when expressed in EUR or USD.

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Until September 2018, AKZ devaluated about 46% against the Euro.

Recurring ROTE in Portugal of 8.6%

(
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a
1
9
5
0
2
2
8
5
O
1
0
%
R
T
E
>
(
)
in
re
cu
rr
g
i
O
R
R
T
E
e
c
u
r
r
n
g
1
1.
%
7
8.
6
%
i
2
0
2
0
n

1) The average capital considered in the calculation of ROTE excludes the average balance of intangible assets (average consolidated balance in 12 months until September 2018: 39 M.€.) and other comprehensive income (reserves) (average consolidated balance in 12 months until September 2018: ‐7 M.€.)

High asset quality

  • Low levels of defaulted loans; asset quality indicators continue to improve
  • NPE ratio of 3.8%
  • Coverage by impairments and collateral of NPE of 126%

1) According to EBA (European Banking Authority) criteria; considering the prudential supervision perimeter.

Solid capital position

  • The capital ratios in Sep. 18 incorporate a distribution of dividends in accordance with the new long term dividend policy approved in the General Shareholders Meeting of 29 June 2018.
  • CET1 ratio of 13.1%
  • Total capital ratio of 14.8%
  • The sale of the cards business would increase the total capital ratio by 0.1 p.p. to 14.9% (proforma). The operation is expected to be completed in November.

Results in 30 September 2018

  1. Highlights

2. Commercial activity

    1. Results
    1. Balance Sheet
    1. Closing remarks

Annexes

Customer deposits increase 6.9% ytd

C
U
S
T
O
M
E
R
R
E
S
O
U
R
C
E
S
In
M.
18
se
p.
de
c.1
7
1)
Yt
D
de
c.1
7 a
s
for
pro
ma
d
ort
rep
e
‐ba
lan
he
I.
On
et
ce
s
res
ou
rce
s
2
1
4
7
4
2
0
9
7
1
3.
6
%
2
0
6
8
6
2
de
Cu
its
sto
me
r
p
os
2
0
7
1
1
1
9
3
6
8
6.
9
%
1
9
3
6
8
l a
d
f
l
Ins
itu
ion
ina
ia
inv
t
t
est
a
n
nc
ors
de
its
p
os
7
6
3
1
3
5
1
%
4
4
1
3
1
8
de
I
I.
As
ts
t
se
un
r m
an
ag
em
en
9
6
7
0
9
7
5
4
0.
9
%
1
0
1
2
3
l
fun
ds
Mu
tu
a
5
5
2
4
5
6
5
8
%
2.
4
6
0
2
7
Ca
ita
l
isa
ion
ins
t
p
ura
nc
e
4
1
4
5
4
0
9
6
1.
2
%
4
0
9
6
b
l
ic o
f
fer
ing
I
I
I.
Pu
s
2
0
0
9
2
1
5
1
6.
6
%
2
1
5
1
l
To
ta
3
3
1
5
3
3
2
6
2
4
%
1.
6
3
2
9
6
0
rke
ha
Ma
t s
res
31
18
Au
g.
31
De
c 1
7
3
To
tal
de
sit
s
po
9.9
%
9.8
%
4
l fu
nd
Mu
tua
s
.8%
15
16
.4%
4
R's
PP
11
.5%
12
.8%
4
lis
Ca
ita
ati
in
p
on
su
ran
ce
15
.0%
14
.3%

1) Proforma considering the sale of BPI Gestão de Ativos and BPI GIF.

2) Includes retail bonds of 20 M.€ in Sep.18 and 35 M.€ in Dec.17.

3) Market share as of July 18. Does not include the effect of securitization operations (BPI calculation).

4) PPRs include PPR in the form of mutual funds and capitalization insurance. For that reason those PPRs are excluded in the calculation of the market shares of mutual funds and insurance capitalisation.

Customer deposits increase by 6.9% ytd (+ 1 343 M.€)

The Bank has been actively reducing its offer of deposits to institutional investors with the purpose of optimizing liquidity ratios (LCR).

32 62433 153+1,343 (588) (133) +49 (141) 31 Dez.2017 prof. 30 Set.2018In M.€‐85 M.€+0.5 Bi.€+1.6%Customer deposits Mutual fundsCapitalis. InsurancePublic subscript. offersDeposits of institutional investors and others31 Dec. 2017 prof.30 Sep. 2018On balance sheet resourcesAssets under management +754 M.€

CUSTOMER RESOURCES EVOLUTION

Loans to companies in Portugal increase by 12.0% ytd

L
O
A
N
S
T
O
C
U
S
T
O
M
E
R
S
B
Y
S
E
G
M
E
N
T
S
fo
l
Gr
io
in
M

t
os
s p
or
,
1
8
se
p‐
de
1
7
c‐
Y
D
t
in
d
iv
i
du
ls
I.
Lo
to
an
s
a
1
2
7
0
9
1
2
4
0
8
2.
4
%
lo
M
tg
or
ag
e
an
s
1
1
2
3
3
1
1
0
8
4
1.
3
%
he
lo
d
du
ls
O
in
iv
i
t
to
r
an
s
a
1
4
7
5
1
3
2
4
1
1.
4
%
Co
ies
I
I.
Lo
to
an
s
m
p
an
9
0
3
1
8
3
8
7
%
7.
7
d m
d
d
La
iu
ize
rg
e a
n
e
m
s
ies
d
&
Co
te
co
mp
an
a
n
rp
or
a
k
Inv
Ba
in
tm
t
es
en
n
g
5
7
5
0
5
0
5
1
%
1
3.
8
2)
Sm
l
l
bu
in
s
a
s
es
se
2
1
3
7
1
9
9
0
7.
4
%
l
ies
in
l
To
Co
Po
ta
tu
mp
an
r
g
a
7
8
8
7
7
0
4
1
%
1
2.
0
f
j
in
d
dr
i
d
Pr
M
t
o
ec
an
ce
a
n
a
h
Br
an
c
1
1
4
4
1
3
4
7
(
)
1
5.
0
%
b
l
ic
I
I
I.
Pu
to
se
c
r
1
5
6
6
1
3
0
5
2
0.
0
%
he
I
V.
O
t
r
1
1
6
1
2
3
(
)
5.
6
%
l
To
ta
2
3
4
2
2
2
2
2
2
3
5.
4
%
No
te
:
lo
fo
l
Ne
io
t
t
an
p
or
2
2
8
6
7
2
1
6
3
8
5.
7
%

Growth trends continue in the first 9 months of the year

  • Loans to companies in Portugal goes up by 12.0% ytd.
  • Mortgage loan portfolio increases 1.3% ytd and consumer loans increase 11.4% ytd.
  • Total loan portfolio grows by 5.4% YTD.

151) Large and medium‐sized companies and small businesses in Portugal. Excludes project finance and Madrid branch loan portfolio. Balances from March 17 to September 17 adjusted by migration of loans between segments. 2) Part of the loan portfolio from the Private Banking segment relating to loans to individuals was reclassified to "Other loans to individuals", when previously it was included in the "Small businesses" caption. Historical values have been adjusted.

Corporate and small businesses loans in Portugal go up by 12.0% YtD and BPI market share increases

Corporate and small businesses loans

Grandes e Médias empresas e Corporate & Investment Banking Empresários e negócios Small businesses 3) Large and medium‐sized companies and Corporate & Investment Banking

Balances from Mar.17 to Sep.17 adjusted for loans migrations between segments. 1) Does not include project finance nor Madrid branch loan portfolio. Source: BPI and BoP. 2) Loans to non financial domestic companies

  • Growth of 13.8% (YtD) in loans to Large and Medium‐sized companies and Corporate & Investment Banking.
  • Growth of 7.4% (YtD) in loans to small businesses3).
  • Gradual increase in market share (9.2% in July 2018).

3) Part of the loan portfolio from the Private Banking segment relating to loans to individuals was reclassified to "Other loans to individuals", when previously it was included in the "Small businesses" caption. Historical values have been adjusted.

BPI continues gaining market share

Personal loans and car finance

  • Origination of mortgage loans goes up by 36% yoy to 1050 M.€ in 30 September 2018.
  • Origination exceeds amortisations since the 3rd quarter of 2017 and trend in the reduction of the portfolio is reversed.
  • Consistent increase in the loan portfolio market share (11.4% in August 2018) in a segment of the market that is still shrinking.
  • Origination of personal loans and car finance increases 40% yoy.

Results in 30 September 2018

    1. Highlights
    1. Commercial activity

3. Results

    1. Balance Sheet
    1. Closing remarks

Annexes

Sustained improvement in the financial margin in 2018

Financial margin increases 9.1% yoy in September 2018, despite the cost (+4 M.€ yoy) with subordinated debt issued in Mar. 17.

Trends in margin evolution:

  • Reduction in the average cost of term deposits (in euro) from 0.10% in Sep.17 to 0.07% in Sep.18
  • Growth of loan portfolio in Portugal
  • Cost in 30 Sep. 18 (+4 M.€ yoy) from the subordinated Tier II debt issued on 24 Mar.17 (remuneration Euribor 6M + 5.74%)

Intermediation margin increases 2 basis points to 175 b.p.

  • Adjustment of the cost of time deposits has been the main factor for the improvement of the intermediation margin, more than compensating the narrowing of loans spreads.
  • Average remuneration of time‐deposits is close to zero.
  • Average remuneration of the loan portfolio is stable.

1) From 4Q16 onwards (including) it refers to the deposits' remuneration contracted in euros.

Commissions increase by 5.6% yoy in September 2018

Commissions

Commissions by business area

E
M

m
S
‐1
8
e
p
S
‐1
7
e
p
Y
Y
o
k
B
i
i
i
a
n
n
g
c
o
m
m
s
s
o
n
s
1
2
1.
8
1
1
8.
5
2.
8
%
l
f
d
M
t
u
u
a
u
n
s
3
0.
2
2
6.
7
1
3.
1
%
I
n
s
u
r
a
n
c
e
4
9.
6
4
5.
6
8.
6
%
)
1
l
T
t
o
a
2
0
1.
5
1
9
0.
8
5.
6
%

1)BPI Alternative Fund ceased to be consolidated in Banco BPI accounts from March 2017 onwards. In the consolidation of that fund, net commissions paid by the BPI Alternative Fund of 2.2 M.€ in the 1Q17 were recorded.

2) OTRV ‐ Obrigações do Tesouro de Rendimento Variável (Portuguese government floating rate bonds).

Net commissions increase by 5.6% yoy in September 2018 (+10.7 M.€), although 6.6 M.€ of commissions were recorded with the placement of OTRV with BPI clients in Sep. 17 vs. 2.3 in Sep. 18.

Recurring operating income from banking activity increases 7.4% yoy

O
P
E
R
A
T
I
N
G
I
N
C
O
M
E
F
R
O
M
B
A
N
K
I
N
G
A
C
T
I
V
I
T
Y,
M
I
M

n
S
2
0
1
7
e
p.
S
2
0
1
8
e
p.

%
f
b
k
i
O
i
i
i
i
i
R
t
t
t
e
c
u
r
r
n
g
p
e
r
a
n
g
n
c
o
m
e
r
o
m
a
n
n
g
a
c
v
y
l
i
i
i
F
n
a
n
c
a
m
a
r
g
n
2
8
9.
0
3
2
1
5.
9.
%
1
+
i
i
i
N
t
e
c
o
m
m
s
s
o
n
n
c
o
m
e
9
0.
8
1
2
0
1.
5
6
%
5.
+
f
(
)
i
i
d
i
i
h
d
E
t
t
t
a
r
n
n
g
s
o
a
s
s
o
c
a
e
c
o
m
p
a
n
e
s
e
q
m
e
o
u
y
d
f
i
i
i
t
t
t
a
n
n
c
o
m
e
r
o
m
e
q
u
y
n
s
r
u
m
e
n
s
2
1.
3
1
4.
9
%
3
0.
0
f
l
d
h
N
i
i
i
i
t
t
t
e
n
c
o
m
e
o
n
n
a
n
c
a
o
p
e
r
a
o
n
s
a
n
o
e
r
s
2.
8
9.
8
2
4
8.
2
%
+
i
i
i
f
b
k
i
i
i
R
O
t
t
t
e
c
r
r
n
g
p
e
r
a
n
g
n
c
o
m
e
r
o
m
a
n
n
g
a
c
u
v
y
5
0
3.
8
5
4
1.
4
7.
4
%
+
i
i
N
t
o
n
r
e
c
r
r
n
g
e
m
s
u
0.
0
5
9.
6
s.
s.
f
b
k
O
i
i
i
i
i
d
t
t
t
t
p
e
r
a
n
g
n
c
o
m
e
r
o
m
a
n
n
g
a
c
v
y
a
s
r
e
p
o
r
e
0
3.
8
5
6
0
0.
9
9.
3
%
1
+

Recurring operating income from banking activity increases 7.4% yoy in September 2018 driven by the growth in financial margin and commissions

Operating income from banking activity as reported grows 19.3% yoy

Recurring overhead costs decrease by 0.5% yoy

  • Overhead costs excluding costs from voluntary terminations and early retirements decrease by 1.5 M.€ (‐0.5%) yoy
  • Recurring personnel costs fell by 18.5 M.€ (‐9.3%) yoy
  • General administrative costs are in line with budget forecast
  • BPI expects to reach a cost‐to‐income close to 50% in 2020

1) Additionally, at Sep.18, BPI had 39 premier centres, 35 corporate centres and 1 mobile branch in Portugal, thus totalling 496 business units.

Employee pension liabilities covered at 105%

fu
(
)
io
d
in
be
Pe
Se
2
0
1
8
tu
te
ns
n
n
re
rn
p
m
r
6.
6
%
---------------------------------------------------------------------------------------------------------------------------- --------------
M
3
1
De
1
7
c.
3
0
S
1
8
e
p.
l p
l
b
l
To
ice
ia
i
i
ta
t s
ty
as
er
v
1
6
0
4
1
5
6
8
f
he
fu
ds
Ne
io
t a
ts
t
ss
e
o
p
en
s
n
n
1
5
6
8
1
6
4
2
f c
f p
io
l
ia
b
i
l
i
ie
De
t
g
re
e
o
ov
er
ag
e
o
en
s
n
s
%
9
8
%
1
0
5
isc
D
t r
te
ou
n
a
%
2.
0
0
%
2.
0
9
la
h
Sa
t
te
ry
g
ro
w
ra
%
1.
0
0
%
1.
0
0
io
h
Pe
t
te
ns
ns
g
ro
w
ra
%
0.
5
0
%
0.
5
0
l
b
le
M
i
M
ta
ty
ta
or
en
:
/
T
V
8
8
9
0
l
b
le
M
i
W
ta
ty
ta
or
om
en
:
1)
/
T
V
8
8
9
0 –
3 y
ea
rs

M
l a
ia
l
d
ia
io
To
3
1
De
1
7
t
tu
t
t
a
c
a
r
ev
ns
a
c.
(
)
2
1
1
fu
ds
de
Pe
io
in
ia
io
t
ns
n
n
co
m
e
v
n
7
8
ha
in
he
d
isc
C
t
t r
te
ng
e
ou
n
a
2
6
he
O
t
r
(
)
7
l a
l
d
ia
ia
io
3
0
S
8
To
1
t
tu
t
t
a
c
a
r
ev
ns
a
e
p.
(
)
1
1
4

Pension fund return of 6.6% (non annualized) in 9M18 with a positive impact of 78 M.€ in actuarial deviations.

Employee pension liabilities covered at 105%.

2) Recognised directly in shareholders, in accordance with IAS19. 1) For the target population, the age below the actual age of beneficiaries is two years for men and three years for women respectively, which is equivalent to considering a higher life expectancy.

Loan impairment reversals of 10 M.€ and recoveries of 18 M.€ in 9M18

Cost of credit risk1)

COST OF CREDIT RISK

(Impairments after deducting recoveries from loans previously written off)

20
12
20
13
20
14
20
15
20
16
20
17
9M
18
M.
2
4
2
2
4
9
1
5
8
8
7
1
9
5
‐2
8
loa
%
n
fo
lio
rt
po
0.
9
1
%
0.
9
8
%
0.
6
6
%
0.
3
8
%
0.
0
9
%
0.
0
2
%
‐0.
1
7
%
  • Loan recoveries previously written off amounted to 18 M.€ in 9M18.
  • The application of IFRS 9 led to an increase of 35 M.€ in loan impairments, which was directly recognized in shareholders' equity, and an impact in shareholders' equity of ‐26 M.€.

Results in 30 September 2018

    1. Highlights
    1. Commercial activity
    1. Results

4. Balance Sheet

  1. Closing remarks

Annexes

NPE ratio of 3.8% in Sep.18

1) Cover by impairments accumulated in the balance sheet for loans and guarantees; does not consider collaterals.

2) NPE ratio and forborne ratio considering the prudential supervision perimeter.

Foreclosed properties at very low levels in BPI

Foreclosed properties of 48 M.€ (net of impairments)

Sale of 300 properties until Sep.18 for 26 M.€. Positive impact in profits before taxes of 2.8 M.€.

2) Includes 34.7 M.€ of impairments booked in the P&L account until 31 Dec. 2017 and 0.3 M.€ of potential capital losses in the date of transition of IFRS9.

Balanced funding structure and comfortable liquidity position

  • Client Resources are the main source of funding of the balance sheet (72% of assets).
  • Loan to Deposit ratio of 102%.
  • In the 3Q18 BPI repaid 0.6 Bi.€ of funding obtained with the ECB (TLTRO), decreasing the amount of funds obtained with the ECB from 2.0 Bi.€ to 1.4 Bi.€. BPI still has 9.0 Bi.€ of high quality liquid assets and assets eligible as collateral for additional funding from the ECB.
  • Portfolio of short term public debt of 0.8 Bi.€
  • Portfolio of medium and long term public debt of 2.6 Bi.€, of which 2.1 Bi.€ was acquired in the 1H18 (with an average residual maturity of 2.6 years).
  • Recourse to wholesale debt market is small (2.7% of assets).

2) Average amount (last 12 months) of LCR components calculation: Liquidity Reserves (4 011 M.€); Total net outflows (2 399 M.€).

1) High Quality Liquid Asset.

M.
k v
lue
Bo
o
a
(
)
M.
l
Po
ia
ten
t
ita
l
ca
p
/
ins
g
a
(
)
los
se
s
l
Re
i
du
s
a
ity
tur
ma
,
y
ea
rs
fa
ir v
lue
hro
h o
he
At
t
t
a
ug
r
he
ive
inc
co
mp
re
ns
om
e
3)
ho
b
l
de
bt
S
ic
rt‐
te
rm
p
u
7
6
8
0 0.
3
4)
b
l
de
bt
M
L
T p
ic
u
8
0
0
1 1.
5
Eq
i
ies
t
u
8
0
6
0
ise
d c
At
ort
ost
am
5)
L
b
l
ic
de
bt
M
T p
u
1
7
7
3
2.
6
l
To
ta
3
4
2
1
6
1

Fully loaded Capital ratios

FULLY LOADED CAPITAL RATIOS

Consolidated


M
3
0
S
2
0
1
7
e
p.
3
1
2
0
1
D
7
e
c.
3
0
S
2
0
8
1
e
p.
l
C
i
t
a
p
a
i
t
r
e
q
u
r
e
m
e
n
s
(
)
2
0
8
S
1
R
E
P
l
i
C
t
a
p
a
i
t
r
e
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)
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%
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1.
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2.
3
%
1
3.
%
1
1
8
%
7
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9
%
7
5
i
i
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t
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r
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o
1
1.
5
%
1
2.
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1
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2
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o
6.
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%
6.
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%
7.
2
%
3.
0
)
2
%

CET1 ratio of 13.1%

Total capital ratio of 14.8%

The sale of the cards business would increase the total capital ratio by 0.1 p.p. to 14.9% (proforma). The operation is expected to be completed in November.

BPI meets SREP minimums for CET1, T1 and total ratio

Leverage ratio of 7.2%

2)Minimum value in calibration.

1)Minimum requirements applicable in 2021.

BPI has investment grade long‐term credit rating from Fitch, Moody's and S&P

nd
… A
A‐,
AA
, AA
AA
A
+ a
a2,
nd
… A
Aa
1 a
Aaa
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3
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(
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(
low
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k
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Ba
n
B
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k
Ba
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n
B
B
+
(
h
h
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k
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e k
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Ba
n
2
Ba
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k
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Ba
4
n
d
a
r
g
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Ba
3
k
2
Ba
n
B
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k
k
Ba
2
Ba
3
n
n
(
low
)
B
B
t
n
e
B
+
1
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k
Ba
4
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n
+
(
h
h
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B
m
t
s
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B
Ba
5
n
e
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n
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low
)
B
n
o
N
C
C
C
+
Ca
1
a
C
C
C
+
(
)
h
h
C
C
C
ig
nd
… C
CC,
CC
C‐,
CC,
C a
D
k
Ca
2
Ba
5
n
a
nd
… C
CC,
CC
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CC,
C a
D
C (
),
(
h),
(
),
… C
CC,
CC
low
CC
hig
CC,
CC
low
C (
hig
h),
C (
low
),
C,
D
and
Caa
3,
Ca
C
de
Inv
B
B
B ‐
tm
t g
es
en
ra
de
2
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Ba
tm
t g
es
en
ra
a
de
Inv
B
B
B
tm
t g
es
en
ra
  • Moody's (16 Oct.) upgraded by 2 notches BPI's long‐term debt rating from Ba1 to Baa2, with a stable Outlook. The rating of long‐term deposits was also upgraded by two notches from Baa3 to Baa1, with a Stable Outlook
  • Fitch(11 Oct.) upgraded by 1 notch BPI's long‐term debt rating, from BBB‐ to BBB, with stable Outlook
  • S&P(9 Oct.) upgraded by 2 notches BPI's standalone rating, from bb‐ to bb+, and reaffirmed the BBB‐ long‐term debt rating, with a positive Outlook

Results in 30 September 2018

    1. Highlights
    1. Commercial activity
    1. Results
    1. Balance Sheet

5. Closing remarks

Annexes

Results in 9M18 ‐ highlights

d
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%
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>

Results in 30 September 2018

Annexes

  • Income Statements and Balance sheet in accordance with IAS / IFRS
  • Profitability and efficiency as in the Bank of Portugal's Instruction no. 16/2004
  • Alternative Performance Measures

Income Statement of activity in Portugal

Income Statement

Se
2
0
1
8
p.
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2
0
p.

In

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As No
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%
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be
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t
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(
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(
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(
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(
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%
fro
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inc
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ing
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t
nt
at
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(
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t
t
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p
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s
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b
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l
l
Inc
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ing
ttr
ta
to
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e a
no
n‐c
on
int
sts
ere
(
)
0.
0
(
)
0.
0
inc
Ne
t
om
e
3
2
4.
4
6
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2
1
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3
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(
)
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2.
0
3
3
1
7.
9.
6
%
1

Net profit of 324.4 M.€ from activity in Portugal in 9M18

Recurring net profit from activity in Portugal of 164.2 M.€ in 9M18, increases 19.6% yoy

Recurring operating income increases +7.4% (+ 37.5 M.€):

  • Financial margin goes up 9.1% (+26.2 M.€)
  • Commissions grow 5.6% yoy (+10.7 M.€)

Recurring costs fall 0.5% yoy (‐1.5 M.€);

Personnel costs fall 9.3% yoy (‐18.5 M.€)

Impairment reversals (net) of 27.5 M.€ in 9M18 vs. 3.8 M.€ in Sep.17

Non recurring items in 9M18:

  • Gain of 42 M.€ with the sale of the merchant acquiring business (58 M.€ before taxes) in the 3Q
  • Gain of 62 M. € with the sale of BPI Gestão de Activos and BPI GIF in 2Q (booked in income from discontinued operations)
  • Gains of 60 M.€ (after taxes) with the sale of the stake in Viacer in 1Q
  • Costs with early retirements of 5.5 M.€ (7.6 M.€ before taxes)
  • Results of 2.5 M.€ from BPI Gestão de Ativos and BPI GIF reclassified to income from discontinued operations

1) The designation "proforma" reflects the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF for the consolidated net income in conformity with IFRS 5 rules, that is recorded in the net income from discontinued operations, and the adoption of a new format for the Income Statement, following the entry into force of IFRS9, in accordance with the guidelines of the Regulation (EU) 2017/1443 of 29 June 2017 and with the format of the financial statements used by CaixaBank (BPI's consolidating entity).

2) Non recurring in Sep.17: costs with early retirements and voluntary terminations of 76.4 M.€ (105.2 M.€ before taxes), income from discontinued operations (BPI Vida e Pensões, BPI GA and BPI GIF and others) of 14.3 M.€.

Income Statement of activity in Portugal

With reclassification of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF to "Net income from discontinued operations" (IFRS 5)

In M. $\epsilon$ 1Q17 2Q 17 3Q 17 Sep. 17 4Q 17 2017
proforma 1) proforma 1) proforma 1) proforma 1) proforma 1) 1Q18 2Q18 3Q 18 Sep 18
Financial margin 98.0 94.5 96.5 289.0 99.3 388.3 101.5 105.6 108.0 315.2
Income from equity instruments 0.1 6.3 0.1 6.5 0.1 6.5 0.0 1.5 0.2 1.7
Earnings of associated companies (equity method) 4.4 4.6 5.8 14.8 (1.4) 13.4 2.5 5.9 4.7 13.2
Net commission income 58.9 64.2 67.7 190.8 72.2 263.0 65.6 69.0 66.9 201.5
Net income on financial operations 7.6 7.0 8.0 22.6 (8.2) 14.5 72.5 6.4 6.2 85.1
Operating income and expenses (1.4) (16.2) (2.2) (19.8) (3.7) (23.5) (0.5) (15.3) (0.0) (15.8)
Operating income from banking activity 167.5 160.4 175.9 503.8 158.3 662.1 241.7 173.2 186.1 600.9
Personnel costs (76.7) (161.4) (66.0) (304.0) (64.7) (368.7) (63.8) (63.0) (61.1) (187.9)
Of which: Recurring personnal costs (65.9) (67.0) (65.9) (198.8) (64.0) (262.9) (61.1) (58.2) (61.1) (180.3)
Non-recurring $\cos ts^2$ (10.7) (94.4) (0.1) (105.2) (0.6) (105.8) (2.7) (4.9) (7.6)
General administrative costs (37.9) (40.5) (38.1) (116.5) (34.1) (150.6) (41.8) (42.6) (48.6) (133.1)
Depreciation and amortisation (5.5) (5.5) (5.6) (16.5) (5.3) (21.8) (5.2) (5.2) (6.4) (16.9)
Overhead costs (120.0) (207.4) (109.6) (437.0) (104.0) (541.1) (110.8) (110.9) (116.2) (337.9)
Net operating income before impairments and provisions 47.5 (47.0) 66.3 66.8 54.3 121.1 130.9 62.3 69.9 263.1
Impairments and provisions net of recoveries of loans,
interest and expenses
5.2 (13.8) 12.4 3.8 (3.3) 0.5 11.1 0.0 16.3 27.5
Gains and losses in other assets 6.0 1.7 1.3 9.0 3.2 12.2 (0.1) (0.5) 57.7 57.0
Net income before income tax 58.8 (59.1) 80.0 79.7 54.1 133.8 141.9 61.8 143.9 347.6
Income tax (19.7) 22.6 (21.7) (18.7) (22.0) (40.7) (25.9) (19.4) (42.0) (87.4)
Net income from continuing operations 39.1 (36.5) 58.3 61.0 32.1 93.1 115.9 42.4 101.9 260.2
Net income from discontinued operations 3.9 4.1 6.3 14.3 16.3 30.6 2.5 61.8 64.2
Income attributable to non-controlling interests (0.0) (0.0) 0.0 (0.0) (0.0)
Net income 43.1 (32.4) 64.6 75.3 48.4 123.7 118.4 104.1 101.9 324.4

1) The designation "proforma" reflects the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF for the consolidated net income in conformity with IFRS 5 rules, that is recorded in the net income from discontinued operations, and the adoption of a new format for the Income Statement, following the entry into force of IFRS9, in accordance with the guidelines of the Regulation (EU) 2017/1443 of 29 June 2017 and with the format of the financial statements used by CaixaBank (BPI's consolidating entity).

2) Costs with early retirements and voluntary terminations.

Consolidated income statement

With reclassification of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF to "Net income from discontinued operations" (IFRS 5).

In M. $\epsilon$ 1Q 17
proforma 1
2Q 17
proforma 1)
3Q 17 Sep. 17 4Q 17
proforma 1) proforma 1) proforma 1)
2017 1Q18 2Q18 3Q 18 Sep. 18
Financial margin 97.9 94.5 96.4 288.8 99.2 388.1 101.5 105.6 108.0 315.2
Income from equity instruments 0.1 6.3 0.1 6.5 0.1 6.5 0.0 1.5 0.2 $1.7$
Earnings of associated companies (equity method) 56.1 64.6 72.1 192.8 (68.0) 124.8 108.6 63.1 74.7 246.4
Net commission income 59.2 64.5 68.0 191.6 72.3 264.0 65.6 69.0 66.9 201.5
Net income on financial operations 7.6 7.0 8.0 22.6 (8.2) 14.4 66.7 7.1 3.5 77.3
Operating income and expenses (1.4) (16.2) (2.2) (19.8) (4.5) (24.3) (0.5) (15.3) (0.0) (15.8)
Operating income from banking activity 219.5 220.6 242.4 682.5 91.0 773.5 341.9 231.1 253.4 826.4
Personnel costs (77.1) (161.8) (66.1) (305.0) (64.7) (369.7) (63.8) (63.0) (61.1) (187.9)
Of which: Recurring personnal costs (66.3) (67.4) (66.0) (199.8) (64.1) (263.9) (61.1) (58.2) (61.1) (180.3)
Non-recurring costs 2) (10.7) (94.4) (0.1) (105.2) (0.6) (105.8) (2.7) (4.9) (7.6)
General administrative costs (38.0) (40.6) (38.2) (116.8) (34.1) (150.9) (41.8) (42.6) (48.6) (133.1)
Depreciation and amortisation (5.5) (5.5) (5.6) (16.6) (5.3) (21.9) (5.2) (5.2) (6.4) (16.9)
Overhead costs (120.6) (208.0) (109.8) (438.3) (104.2) (542.5) (110.8) (110.9) (116.2) (337.9)
Net operating income before impairments and provisions 99.0 12.7 132.5 244.2 (13.2) 231.0 231.1 120.2 137.2 488.5
Impairments and provisions net of recoveries of loans,
interest and expenses
5.2 (14.5) 12.4 3.1 (3.3) (0.1) 11.3 0.1 16.3 27.7
Gains and losses in other assets 6.0 1.7 1.3 9.0 3.2 12.2 (0.1) (0.5) 57.7 57.0
Net income before income tax 110.2 (0.1) 146.2 256.3 (13.3) 243.0 242.3 119.8 211.2 573.3
Income tax (24.9) 16.7 (28.3) (36.5) (15.3) (51.8) (34.8) (25.3) (48.2) (108.4)
Net income from continuing operations 85.4 16.5 117.9 219.8 (28.6) 191.3 207.4 94.4 163.0 464.9
Net income from discontinued operations (207.7) 4.1 6.3 (197.3) 16.3 (181.0) 2.5 61.8 64.2
Income attributable to non-controlling interests (0.0) (0.0) 0.0 (0.0) (0.0)
Net income (122.3) 20.6 124.3 22.6 (12.3) 10.2 209.9 156.2 163.0 529.1

EARNINGS PER SHARE

Sep. 17 proforma 1) Sep. $18$
Earnings per share $(\epsilon)$ 0.02 0.36
Net income from continuing operations $(\epsilon)$ 0.15 0.32
Net income from discontinued operations $(\epsilon)$ $-0.14$ 0.04
Average weighted nr. of shares (in millions) 1456 1457

1) The designation "proforma" reflects the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF for the consolidated net income in conformity with IFRS 5 rules, that is recorded in the net income from discontinued operations, and the adoption of a new format for the Income Statement, following the entry into force of IFRS9, in accordance with the guidelines of the Regulation (EU) 2017/1443 of 29 June 2017 and with the format of the financial statements used by CaixaBank (BPI's consolidating entity).

2) Costs with early retirements and voluntary terminations.

Consolidated Balance Sheet

With the entry into force of IFRS 9, In M. $\epsilon$ 31 Dec. 17 31 Mar. 18 30 Jun. 18 30 Sep. 18
Assets
Banco BPI decided to adopt a Cash, deposits at Central Banks and other demand deposits 1 0 9 4 . 1 826.8 2 2 5 9 . 7 1 3 9 6.8
structure of the individual and Financial assets held for trading, at fair value through profit or 4 175.9 2 4 6 7.2 2 671.6 2 139.6
loss and at fair value through other comprehensive income
consolidated financial statements in Financial assets at amortised cost 22 506.7 24 448.7 25 636.4 25 383.9
line with the guidelines of Regulation Of which:
Loans to Customers 21 638.2 22 043.8 22 505.8 22 867.4
(EU) 2017/1443 of June 29, 2017 and Investments in subsidiaries, associated companies and jointly 794.5 752.2 717.0 719.4
with the structure of the financial Tangible assets 45.3 42.4 38.6 37.4
Intangible assets 42.3 40.1 45.3 44.9
statements presented by CaixaBank Taxassets 453.2 401.5 421.6 389.0
(the consolidating entity of Banco Non-current assets held for sale and discontinued operations 73.3 64.8 54.6 49.5
Other assets 454.9 320.5 433.6 398.8
BPI). Total assets 29 640.2 29 364.2 32 278.3 30 559.2
Liabilities and shareholders' equity
Financial liabilities held for trading 170.0 170.3 154.6 139.1
Financial liabilities at amortised cost 25 961.4 25 802.0 28 261.8 26 535.7
Central Banks and Credit Institutions deposits 3 978.0 4 0 38.7 5 2 9 4.7 3 9 5 4.7
Customers deposits 20 713.6 20 911.7 22 113.6 21 497.2
Technical provisions
Debt securities issued 1 0 2 0 .0 616.9 593.6 823.7
Of which: subordinated debt 305.1 300.3 304.4 300.3
Other financial liabilities 249.8 234.6 259.8 260.1
Provisions 64.2 64.2 66.9 66.5
Tax liabilities 70.6 73.8 72.5 71.6
Non-current liabilities held for sale and discontinued operations 4.5 4.6 0.0 0.0
Other liabilities 545.8 316.6 596.9 528.4
Total liabilities 26 816.6 26 431.5 29 152.6 27 341.3
Shareholders' equity attributable to the shareholders of BPI 2823.6 2 9 3 2.7 3 1 2 5 . 7 3 2 1 7 . 9
Non controlling interests 0.0 0.0 0.0 0.0

Total Sha reholde rs' equi ty 2 823.6 2 932.7 3 125.7 3 217.9 Total liabilities and Shareholders' equity 29 640.2 29 364.2 32 278.3 30 559.2

Consolidated profitability and efficiency metrics

According to Bank of Portugal Instruction no. 16/2004 with the amendments of Instruction 6/2018

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1) Considering the "proforma" financial statements of Sep.17 which reflect the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF for the consolidated net income in conformity with IFRS 5 rules, and the adoption of a new format for the Income Statement, following the entry into force of IFRS9, and the reclassification of certain General Administrative costs to Comissions paid.

2) Excluding early‐retirement costs.

The European Securities and Markets Authority (ESMA) published on 5 October 2015 a set of guidelines relating to the disclosure of Alternative Performance Measures by entities (ESMA / 2015 / 1415). These guidelines are to be obligatorily applied with effect from 3 July 2016.

In addition to the financial information prepared in accordance with the International Financial Reporting Standards (IFRS), BPI uses a set of indicators for the analysis of performance and financial position, which are classified as Alternative Performance Measures, in accordance with the abovementioned ESMA guidelines.

The information relating to those indicators has already been the object of disclosure, as required by the ESMA guidelines.

In the current presentation, the information previously disclosed is inserted by way of cross‐reference. A summarized list of the Alternative Performance Measures is presented next.

EARNINGS, EFFICIENCY AND PROFITABILITY INDICATORS

Reconciliation of the income statement

With the entry into force of IFRS9, in the beginning of 2018, Banco BPI decided to adopt a structure of the individual and consolidated financial statements in line with the guidelines of the Regulation (EU) 2017/1443 of 29 June 2017 and with the format of the financial statements used by CaixaBank (BPI's consolidating entity).

The following table presents, for the consolidated income statement, the reconciliation of the structure used in the current document (Banco BPI Consolidated results in September 2018) with the structure used in the financial statements and respective notes of the 1st Half 2018 Report.

Consolidated income statement

d i
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48
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3.3
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)
108
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46
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4.9
(‐
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PR
OF
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[no
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]
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52
9.1
52
9.1
(‐
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PR
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PA
RE
NT

Annexes5

EARNINGS, EFFICIENCY AND PROFITABILITY INDICATORS

The following earnings, efficiency and profitability indicators are defined by reference to the above structure of the profit and loss account used in this document.

Operating income from banking activity = Financial margin + Income from equity instruments + Net commission income + Earnings of associated companies (equity method) + Net income on financial operations + Operating income and expenses

Commercial banking income = Financial margin + Income from equity instruments + Net commission income + Earnings of associated companies (equity method) excluding the contribution of stakes in African banks

Overhead costs = Personnel costs + General administrative costs + Depreciation and amortisation

Adjusted overhead costs = Personnel costs excluding cost with early retirements and voluntary terminations and (only in 2016) gains with the revision of the Collective Labour Agreement (ACT) + General administrative costs + Depreciation and amortisation

Net operating income before impairments and provisions = Operating income from banking activity ‐ Overhead costs

Net income before income tax = Net operating income before impairments and provisions + Impairments and provisions net of recoveries of loans, interest and expenses + Gains and losses in other assets

Cost‐to‐income ratio (efficiency ratio) 1) = Overhead costs / Operating income from banking activity

Adjusted overhead costs‐to‐commercial banking income 1) = Overhead costs, excluding costs with early‐retirements and voluntary terminations and (only in 2016) gains with the revision of the Collective Labour Agreement (ACT) / Commercial banking income

Return on Equity (ROE) 1) = Net income for the period / Average value in the period of shareholders' equity attributable to BPI shareholders after deduction of the fair value reserve (net of deferred taxes) related to financial assets available for sale

Return on Tangible Equity (ROTE) 1) = Net income for the period / Average value in the period of shareholders' equity attributable to BPI shareholders after deduction of intangible net assets and other comprehensive income (reserves).

Return on Assets (ROA) 1) = (Net income attributable to BPI shareholders + Income attributable to non‐controlling interests ‐ preference shares dividends paid) / Average value in the period of net total assets

Unitary intermediation margin = Loan portfolio average interest rate, excluding loans to Employees ‐ Deposits average interest rate

1) Ratio referring to the last 12 months, except when indicated otherwise. The ratio can be computed for the cumulative period since the beginning of the year, in annualised terms, the cases in which it will be clearly marked.

BALANCE SHEET AND FUNDING INDICATORS

On‐balance sheet Customer resources = Deposits + Capitalisation insurance of fully consolidated subsidiaries + Participating units in consolidated mutual funds

Being:

Deposits = Sight and other deposits + Term and savings deposits + Accrued interest + Retail bonds (Fixed / variable rate bonds and structured products placed with Customers + Deposits certificates + Subordinated bonds placed with Customers)

Capitalisation insurance of fully consolidated subsidiaries (BPI Vida e Pensões sold on Dec.17) = Unit links capitalisation insurance and "Aforro" capitalisation insurance and others (Technical provisions + Guaranteed rate and guaranteed retirement capitalisation insurance)

Note: The amount of on‐balance sheet Customer resources is not deducted from the applications of off‐balance sheets products (mutual funds and pension plans) in on‐balance sheet products.

Assets under management = Mutual funds + Capitalisation insurance + Pension plans

  • Mutual funds = Unit trust funds + Real estate investment funds + Retirement‐savings and equity‐savings plans (PPR and PPA) + Hedge funds + Assets from the funds under BPI Suisse management + Third‐party unit trust funds placed with Customers
  • Capitalisation Insurance = Third‐party capitalisation insurance placed with Customers
  • Pension plans = pension plans under BPI management (includes pension plans of BPI Group)

Notes:

(i) Amounts deducted from participating units in the Group banks' portfolios and from off‐balance sheet products investments (mutual funds and pension plans) in other off‐balance sheet products. (ii) Following the sale of BPI Vida e Pensões in Dec.17, the capitalisation insurance placed with BPI's Customers are recorded off balance sheet, as "third‐party capitalisation insurance placed with Customers", and pension funds management is excluded from BPI's consolidation perimeter.

Subscriptions in public offerings = Customers subscriptions in third parties' public offerings

Total Customer Resources = On‐balance sheet Customer Resources + Assets under management + Subscriptions in public offerings

Gross loans to customers = Gross loans and advances to customers (financial assets at amortized cost), excluding other assets (guarantee accounts and others) + Gross debt securities issued by Customers (financial assets at

amortized cost)

Note: gross loans = performing loans + loans in arrears + receivable interests

Net loans to Customers= Gross loans to customers – Impairments for loans to customers

Loan‐to‐deposit ratio (CaixaBank criteria) = (Net loans to Customers ‐ Funding obtained from the EIB, which is used to provide credit) / Deposits and retail liabilities

ASSET QUALITY INDICATORS

Impairments for loans and guarantees as % of the loan portfolio1) = Impairment losses and provisions for loans and guarantees / Average value in the period of the performing loan portfolio Being:

Impairment losses and provisions for loans and guarantees = Impairments or impairments reversal from financial assets not measures at fair value through profit or loss relating to loans and advances to customers and debt securities issued by Customers (financial assets at amortised cost), before deducting recovery of loans, interest and expenses + provisions or provisions reversals for commitments and guarantees

Cost of credit risk as % of the loan portfolio 1)= (Impairment losses and provisions for loans and guarantees, net ‐ Recovery of loans, interest and expenses) / Average value in the period of the performing loan portfolio Being:

Impairment losses and provisions for loans and guarantees = Impairments or impairments reversal from financial assets not measures at fair value through profit or loss relating to loans and advances to customers and debt securities issued by Customers (financial assets at amortised cost), before deducting recovery of loans, interest and expenses + provisions or provisions reversals for commitments and guarantees

Performing loans portfolio = Gross customer loans ‐ (Overdue loans and interest + Receivable interests and other)

NPE ratio = Ratio of non‐performing exposures (NPE) according to EBA criteria (prudential perimeter)

Coverage of NPE = [Impairments for loans and advances to customers (financial assets at amortised cost) + Impairments for debt securities issued by Customers (financial assets at amortised cost) + Impairments and provisions for guarantees and commitments] / Non‐performing exposures (NPE)

Coverage of NPE by impairments and associated collateral = [Impairments for loans and advances to customers (financial assets at amortised cost) + Impairments for debt securities issued by Customers (financial assets at amortised cost) + Impairments and provisions for guarantees and commitments] + Collateral associated to NPE ] / Non‐performing exposures (NPE)

Non performing loans ratio (Bank of Spain criteria) =Non performing loans (Bank of Spain criteria) / (Gross customer loans + guarantees)

Non performing loans (Bank of Spain criteria) coverage ratio = [Impairments for loans and advances to customers (financial assets at amortised cost) + Impairments for debt securities issued by Customers (financial assets at amortised cost) + Impairments and provisions for guarantees and commitments] / Non performing loans (Bank of Spain criteria)

Coverage of non performing loans (Bank of Spain criteria) by impairments and associated collateral = [Impairments for loans and advances to customers (financial assets at amortised cost) + Impairments for debt securities issued by Customers (financial assets at amortised cost) + Impairments and provisions for guarantees and commitments] + Collateral associated to credit ] / Non performing loans (Bank of Spain criteria)

Impairments cover of foreclosed properties = Impairments for real estate received in settlement of defaulting loans / Gross value of real estate received in settlement of defaulting loans

1) Ratio referring to the last 12 months, except when indicated otherwise. The ratio can be computed for the cumulative period since the beginning of the year, in annualised terms, the cases in which it will be clearly marked.

MARKET INDICATORS

Earnings per share (EPS) = Net income / Weighted average no. of shares in the period (basic or diluted)

The earnings per shares (basic or diluted) is calculated in accordance with IAS 33 ‐ Earnings per share.

Cash‐flow after taxes per share (CF per share or CFPS) = Cash‐flow after taxes / Weighted average no. of shares in the period.

Note: the denominator corresponds to the weighted average no. of shares used in the calculation of earnings per share (basic or diluted).

Book value per share (BV per share or BVPS) =Shareholders' equity attributable to BPI shareholders / No. of shares at the end of the period

Note: the denominator corresponds to the outstanding number of shares after deducting the treasury stocks portfolio and is adjusted for capital increases, whether by incorporation of reserves (bonus issue) or subscription reserved for shareholders (rights issue), amongst other events, in a similar way to the calculation of earnings per share.

Price to earnings ratio (PER) = Stock market share price / Earnings per share (EPS)

Price to cash flow (PCH) = Stock market share price / Cash‐flow after taxes (CFPS)

Price to book value (PBV) = Stock market share price / Book value per share (BVPS)

Earnings yield = Earnings per share (EPS) in the period / Stock market share price (at beginning or end of the period)

Dividend yield = Dividend per share relating to the period / Stock market share price (at beginning or end of the period)

Investor Relations

Tel. +351 226 073 337E‐mail: [email protected] Website: www.ir.bpi.pt

Ricardo Araújo Tel: +351 226 073 119E‐mail: [email protected]

Banco BPI, S.A. Publicly held company Head Office: Rua Tenente Valadim, no. 284, Porto, Portugal Share capital: € 1 293 063 324.98 Registered in Oporto C.R.C. and corporate body no. 501 214 534

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