Banco Comercial Portugues

Earnings Release • Jul 26, 2018

The information in this presentation has been prepared under the scope of the International Financial Reporting Standards ('IFRS') of Group BCP for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002, taking into consideration their successive amendments.

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

First 6 months figures for 2018 and 2017 were not audited.

The information in this document is provided solely for information purposes. It must be understood as being in accordance with the remaining information publicly disclosed by Group BCP.

Earnings for the 1st half of 2018

Mobilizing Millennium: Main guidelines of 2021 strategic plan

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

• Key figures

• Improved profitability, with net earnings of €150.6 million in the 1st half of 2018 1

• Improved credit quality, with NPEs decreasing by €2.1 billion from June 30, 2017 2
• Increasing business volumes, up by €2.9 billion from June 30, 2017 3
• +103,000 active Customers in Portugal from June 30, 2017 4

Highlights

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

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

Improved profitability across geographies

*Includes earnings from domestic activity, from international operations and from discontinued operations (€1.3 million in the 1st half of 2017 and €1.8 million in the 1st half of 2018).

Profit of €150.6 million in the 1st half of 2018

(million euros)	1H17	1H18	YoY	Impact on earnings
Net interest income	678.5	687.7	+1.3%	+9.2
Commissions	330.3	340.2	+3.0%	+9.9
Core income	1,008.8	1,027.9	+1.9%	+19.0
Other income*	40.0	28.9	-27.7%	-11.1
Operating costs	-450.2	-500.8	+11.2%	-50.6
Of which: recurring	-473.9	-492.8	+4.0%	-18.9
Of which: non-usual items (staff costs)	23.7	-8.0		-31.7
Operating net income	598.6	556.0	-7.1%	-42.6
Impairment and provisions	-415.3	-279.8	-32.6%	+135.5
Net income before income tax	183.3	276.2	+50.7%	+92.9
Income taxes, non-controlling interests and disc. operations	-93.4	-125.5	+34.4%	-32.2
Net income	89.9	150.6	+67.5%	+60.7

Net interest income driven by international operations

Increased commissions

Fees and commisions		Consolidated
	1H17	1H18	YoY
Banking fees and commissions	271.6	278.3	+2.5%
Cards and transfers	75.2	79.8	+6.1%
Loans and guarantees	78.5	81.4	+3.7%
Bancassurance	47.5	48.1	+1.3%
Customer account related	52.1	52.4	+0.6%
Other fees and commissions	18.2	16.6	-9.1%
Market related fees and commissions	58.8	61.9	+5.3%
Securities operations	38.2	39.5	+3.6%
Asset management	20.6	22.4	+8.4%
Total fees and commissions	330.3	340.2	+3.0%

Other income* influenced by mandatory contributions and credit sales

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 normalisation trend

Relevant NPE reduction and strengthened coverage

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

Strong Customer acquisition

Awards and surveys

• Bank closest to its Customers; most innovative Bank; Bank of choice; Bank with the most satisfied Customers with digital channels, with Customer service, with Customer manager and with the quality of products/services (BASEF, 5 largest banks in Portugal)
• Leader in online brokerage, with a strong contribution from the Bolsa app and the MTRADER platform, winner of the Best Capital Market Initiative award at Euronext Lisbon Awards 2018

Strong business dynamics results in growing Customer funds

Strong business dynamics, with increasing performing portfolio

Comfortable liquidity position

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

Comfortable capital position

• CET1 capital ratio of 11.7% (fully implemented)
• Increase from a 11.3% fully implemented ratio as of June 30, 2017 due to organic capital generation (+66bps on capital due to earnings from 1st half of 2017) and improved fair value reserves, partially offset by the impact of the IFRS9 adoption, by the deduction of irrevocable commitments (DGF/SRF) and by increased riskweighted assets
• Decrease from a 11.8% fully implemented ratio as of March 31, as organic capital generation (+16bps on capital due to earnings for the quarter) was offset by the deterioration of public debt yields and by increased risk-weighted assets
• Total capital ratios of 13.3% (fully implemented), boosted by the €300 million subordinated debt (tier 2) issued in December 2017

Capital at comfortable levels, strong leverage ratios

Pension fund

(Million euros)

	Dec 17	Jun 18
Pension liabilities	3,050	3,056
Pension fund	3,166	3,202
Liabilities' coverage	104%	105%
Fund's profitability	+4.2%	+3.1%
Actuarial differences	+29	+27

Assumptions

	Dec 17	Jun 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
	0.00% until 2019	0.00% until 2019
Pensions growth rate	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 of the fund unchanged from December 31, 2017
• Coverage of liabilities of 105%

• Positive actuarial deviations in the 1 st half of 2018 (+€27 million), reflecting the performance of the fund above assumptions

• Highlights

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

Increased net income

27

• Net interest income decreased from €390.2 million in the first half of 2017 to €384.8 million in the same period of 2018. The favourable impacts of the repayment of CoCos; of the continued decline in the remuneration of time deposits; and of a lower wholesale funding cost were more than offset by the negative effects of the lower volume of credit, largely reflecting the emphasis on the reduction of NPEs (unlikely to pay); of lower interest recoveries (including IFRS9); and of the securities portfolio (increased balance yielding lower interest, reflecting lower sovereign yields from the end of the first half of 2017)
• Net interest income increased slightly from €192.0 million in the first quarter to €192.8 million in the second quarter of 2018

Continued effort to reduce the cost of deposits

Commissions and other income*

Fees and commissions
	1H17	1H18	YoY
Banking fees and commissions	194.0	201.0	+3.6%
Cards and transfers	51.4	53.1	+3.4%
Loans and guarantees	51.7	53.5	+3.4%
Bancassurance	39.3	40.7	+3.6%
Customer account related	46.4	46.9	+0.9%
Other fees and commissions	5.2	6.9	+32.8%
Market related fees and commissions	31.2	32.9	+5.6%
Securities operations	28.0	29.6	+5.6%	out
Asset management	3.2	3.3	+5.0%
Total fees and commissions	225.2	234.0	+3.9%

• 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 (-€22.4 million in sales of credit) and to higher mandatory contributions (+€8.6 million)

Operating costs

• NPEs in Portugal down to €5.9 billion as of June 30, 2018, a €841 million reduction from year-end 2017
• This decrease is attributable to a €497 million NPLs> 90d reduction and to a €344 million reduction of other NPEs
• NPE total coverage* of 106%, broken down as follows:
• coverage by loan-loss reserves of 48%
• coverage by real estate collateral of 44%
• coverage by financial collateral of 12%
• coverage by expected loss gap of 2%
• NPEs net from loan-loss reserves were down to €3.1 billion on June 30, 2018 from € 9.8 billion at year-end 2013

Lower NPEs, with reinforced coverage

NPE coverage

LLRs

Real estate collateral Cash, other fin.collat., EL gap

Foreclosed assets and corporate restructuring funds

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

Credit now growing in Portugal

• Growth of the performing credit portfolio in Portugal of 1.8% from June 30, 2017
• Strong performance of credit activity in the first six months of 2018:
• New consumer credit increased 19.1% compared to the first half of 2017. Strong focus on digital, with new remote underwriting channels (mobile web and app) and actions targeting Customers with pre-scoring conditions for online credit
• Significant increase in new mortgage lending (+72.7% compared to the first half of 2017), with strong growth in credit simulations on digital channels and a new innovating service allowing contract execution until 10:00pm and during weekends

Main bank of companies in Portugal

Results BFin 2018 DataE*, 5 largest Banks in Portugal

Image indicators (%)

• Millennium bcp is the main Bank of Companies in Portugal, where it leads with a market share of 20.2% in all dimensions (Micro, SMEs, MidCaps and Large Companies), according to BFin 2018 DataE
• Millennium bcp leads in trade, services and industry, as well as in exporting companies, in Portugal 2020, factoring and leasing
• Most used bank for credit lines and main choice of Companies that intend to invest in the next 12 months
• Leadership also in digital, in the usage of both Net Banking and Mobile Banking, and in Customer satisfaction regarding Net Banking
• Bank referred to as the "Overall Best Bank for Companies", "Overall More Efficient", with "Products most appropriate to Companies", "More Innovating" and "Closest to Customers"

*According to DataE, the "Business-Banking Financial Services Barometer (BFin Bancos)" is a study whose main objective is to characterize the Portuguese banking sector from the point of view of companies, regarding banking products and services. The results of BFin 2018 are based on a sample of more than 1,300 companies. The information was collected between April and June 2018. **Satisfaction in Net Promoter Score (NPS) = % promoters - % detractors.

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

Increased contribution from international operations

	1H17	1H18	Δ % local currency	Δ % euros	ROE
Poland	74.3	82.3	+10.8%	+11.7%	9.5%
Mozambique	41.9	51.1	+22.0%	+19.4%	26.1%
Angola*
Before IAS 29 impact	10.8	8.9
IAS 29 impact**	--	-2.7
Total Angola including IAS 29 impact	10.8	6.2
Other	5.6	8.4	+48.8%	+42.2%
Net income	132.6	147.9	+11.6%	+7.1%
Non-controlling interests Poland and Mozambique	-51.0	-58.1
Exchange rate effect	5.5	--
Contribution from international operations	87.1	89.9		+3.1%
Same as above without FX effect and IAS 29 (Angola)	81.6	92.6		+13.4%

Increased net income

(Million euros)

FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723. | *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 (€5.7 million in 2018 and €6.3 million in 2017) is presented in net trading income.

Increased net interest income and commissions

(Million euros)

*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 (€5.7 million in 2018 and €6.3 million in 2017) is presented in net trading income. FX effect excluded. €/Zloty constant at June 2018 levels: Income Statement 4.22565833; Balance Sheet 4.3723.

Credit quality

Growing volumes

Growing net earnings

Growing income partially offset by the increase in operating costs

Credit performance influenced by challenging environment

Growing deposits and lower credit

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

		Consolidated
	1H17	1H18
CET1 fully implemented	11.3%	11.7%
Loans to Deposits	95%	88%
Cost–Income1	45.2%	46.6%
Cost-Core Income1, 2	47.0%	47.9%
Cost of risk	118 bp	88 bp
RoE3	4.3%	6.8%
Cumulative NPE reduction from January 1, 2016 (Portugal)	-€1.9 billion	-€3.9 billion

Earnings for the 1st half of 2018

Mobilizing Millennium: Main guidelines of 2021 strategic plan

Completed cycle of operational turnaround

• Exit from non-performing international operations

• Recovery of full autonomy through early repayment of CoCos

Prepared to face a challenging future

Millennium's 2012-17 turnaround based on core competencies…

1 #1 #3

international portfolio

2017 Capital ratios¹ 2017 ROE

24% 17%

20%

12% 2 … new trends in a changing environment…

• Customers increasingly mobile, impatient and demanding personalization
• Widespread adoption of new technologies and ways of working
• Reinforced need for governance mechanisms to reaffirm compliance with growing regulation and scrutiny
• Reinforced relevance of security and trust
• Potential entry of new players

… require additional capabilities…

Leading Digital, Mobile and Analytics capabilities

Integration in value chain and ecosystems

… complemented with

benefiting from PSD2 environment Robust balance sheet and rigorous capital allocation shaped by strong governance

1 Total capital ratio; 2 Capital Adequacy Ratio

9%

13%

Five strategic priorities to launch a new growth cycle

• Workforce talent as a sustained advantage in the market
• Overall increase in satisfaction
• Employees proud to work at Millennium
• Employees currently satisfied with teams and their direct supervisors

Strengths Priorities going forward

Engagement and commitment

Engagement of the entire organization to proactively pursue new vision and strategy

New ways of working

Empowerment and simplification of decision making with wider collaboration and teamwork across the bank

Merit-based growth

Access to development opportunities and knowledge for all employees

Preparation for the future

Development of capabilities to assume new roles and use of external hiring where necessary, with clear focus on productivity and efficiency

Rewards for success

Alignment of compensation with performance and strategic objectives for all teams

Mobile expanding day-to-day capabilities, with interactions anytime, anywhere

Transform top customer journeys, with advanced analytics modelling

Expand (democratize) personalized ⁺15% solutions

Omni channel model including mobile and remote services complemented by an efficient physical network for comfort and convenience, addressing complex needs and personal advice

Transform operations through NextGen levers to scale up automation of low value added tasks

Main initiatives/levers Ambition for 2021 vs 2017

Weight of digital sales 3x

Time dedicated by branches to complex needs ⁺20%

Increase in branch efficiency (sales per FTE)

share of affluent customers with remote advisory 3x

Cost reduction in central services >10%

Growth and leadership in Portugal

Maximize potential of unique position as the largest private Portuguese bank

Main initiatives/

Strength mortgage position redesigning customer journey and expanding distribution reach

Simplicity and convenience in customer financing

Strengthen market share in high growth segments (consumer lending, affluent and small business)

Innovate the way the customers save and invest

levers Ambition for 2021 vs 2017

+1,2 Bn€

+3pp

Market share in mortgage new business Mortgage new business

+470 M€

Consumer lending new business

+4pp

Market share in non-auto consumer lending

+51 k New affluent customers

+9pp Share off-balance assets

~+100 ^M€ Banking income

Growth and leadership in Portugal

Maximize potential of unique position as the largest private Portuguese bank

Main initiatives/ levers

Become the preferred partner for sound small businesses

Accelerate the credit decision process, adopting "preapproved" facilities and increasing automated approvals in digital channels

Optimize mid-corporate portfolio exploiting value chain financing

Ambition for 2021 vs 2017

+1.1 Bn€

Lending to small business

+1.2 Bn€

Lending to mid-corporate

2x ActivoBank Customers ~+100 M€ Banking income

Reinforce preeminence in corporate

Capture the full potential of the value proposition of ActivoBank

Growth in international footprint

Capitalize on opportunities in high growth markets where we have competitive advantages

Business model sustainability

Pursue low risk retail and commercial banking, innovating in credit management and monitoring

Main levers

Strong governance and management framework in place to ensure plan is delivered

Strictly deliver on NPE plan levers

Streamline credit and risk processes to align with new lending growth aspirations

Reinforce mechanisms to monitor new loan approvals and ensure acceptance of sound risk profiles

Strengthen compliance practices in Portugal and across geographies

Ambition for 2021

^~60% NPE reduction Vis-à-vis 2017

Millennium Group's ambitions for 2021

		1H18	Consolidated 2021
	Total active Customers	4.8 million	>6 million
Franchise growth	Digital customers	45%	>60%
	Mobile customers	26%	>45%
	Cost-Income	47%	≈40%
	RoE	5.3%	≈10%
Value creation	CET1	11.7%	≈12%
	Loans to Deposits	88%	<100%
	Dividend payout	--	≈40%
	NPEs stock	6.7 bn€	≈3 bn€ down by ≈60% from 2017
Asset quality	Cost of Risk	88 bps	<50 bps

Appendix

Sovereign debt portfolio

• The sovereign debt portfolio totalled €11.6 billion, €2.8 billion of which maturing within one year
• The Portuguese sovereign debt portfolio totalled €5.9 billion, whereas the Polish and Mozambican portfolios amounted to €3.9 billion and to €0.6 billion, respectively; "other" includes US sovereign debt of €0.8 billion

Sovereign debt portfolio

(Million euros)

	Portugal	Poland	Mozambique	Other	Total
Trading book*	37	284	0	27	348
≤ 1 year	0	44	0	0	44
> 1 year and ≤ 2 years	33	3	0	26	62
> 2 years and ≤ 5 years	2	196	0	0	199
> 5 years and ≤ 8 years	2	31	0	0	33
> 8 years and ≤ 10 years	0	11	0	0	11
> 10 years	0	0	0	1	1
Banking book**	5,900	3,652	626	1,063	11,242
≤ 1 year	674	765	455	862	2,756
> 1 year and ≤ 2 years	166	1,102	44	0	1,313
> 2 years and ≤ 5 years	1,023	1,669	18	103	2,814
> 5 years and ≤ 8 years	3,842	104	0	2	3,948
> 8 years and ≤ 10 years	7	12	38	96	153
> 10 years	187	0	71	0	259
Total	5,938	3,936	626	1,090	11,590
≤ 1 year	674	809	455	862	2,799
> 1 year and ≤ 2 years	199	1,105	44	26	1,374
> 2 years and ≤ 5 years	1,026	1,865	18	103	3,012
> 5 years and ≤ 8 years	3,844	135	0	2	3,981
> 8 years and ≤ 10 years	8	22	38	96	164
> 10 years	187	0	71	1	260

million).

Diversified and collateralised portfolio

• Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an average LTV of 66%
• 84% 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)	1H17	1H18	YoY	Impact on earnings
Net interest income	678.5	687.7	+1.3%	+9.2
Net fees and commissions	330.3	340.2	+3.0%	+9.9
Other income*	40.0	28.9	-27.7%	-11.1
Banking income	1,048.8	1,056.8	+0.8%	+8.0
Staff costs	-241.5	-289.8	+20.0%	-48.3
Other administrative costs and depreciation	-208.7	-211.0	+1.1%	-2.3
Operating costs	-450.2	-500.8	+11.2%	-50.6
Operating net income (before impairment and provisions)	598.6	556.0	-7.1%	-42.6
Of which: core net income**	558.6	527.1	-5.6%	-31.5
Loans impairment (net of recoveries)	-305.0	-220.8	-27.6%	+84.2
Other impairment and provisions	-110.3	-59.0	-46.5%	+51.3
Impairment and provisions	-415.3	-279.8	-32.6%	+135.5
Net income before income tax	183.3	276.2	+50.7%	+92.9
Income taxes	-43.4	-71.9	+65.5%	-28.5
Non-controlling interests	-51.2	-55.4	+8.2%	-4.2
Net income from discontinued or to be discontinued operations	1.3	1.8	+40.0%	+0.5
Net income	89.9	150.6	+67.5%	+60.7

Consolidated balance sheet

	30 June 2018	30 June 2017
Assets
Cash and deposits at Central Banks	2,165.8	1,650.9
Loans and advances to credit institutions
Repayable on demand	240.6	491.5
Other loans and advances	878.4	895.9
Loans and advances to customers	46,876.6	48,066.0
Other financial assets at amortised cost	1,061.5	451.3
Financial assets held for trading	1,037.2	974.0
Other financial assets not held for trading
mandatorily at fair value through profit or loss	1,386.4	-
Other financial assets held for trading
at fair value through profit or loss	32.9	142.0
Financial assets at fair value through other comprehensive income	12,049.8	12,384.7
Assets with repurchase agreement	24.9	15.4
Hedging derivatives	95.7	113.9
Investments in associated companies	488.6	596.0
Non-current assets held for sale	2,101.5	2,224.0
Investment property	12.1	12.3
Other tangible assets	487.8	487.4
Goodwill and intangible assets	171.6	164.3
Current tax assets	27.0	7.6
Deferred tax assets	2,938.1	3,165.4
Other assets	1,023.8	1,181.3
Total Assets	73,100.2	73,023.7

Liabilities	30 June 2018	30 June 2017
Resources from credit institutions	6,985.8	9,373.2
Resources from customers	53,454.6	50,635.7
Debt securities issued	2,602.1	3,121.4
Financial liabilities held for trading	340.0	476.2
Hedging derivatives	192.2	289.3
Provisions	325.9	339.1
Subordinated debt	1,151.7	850.6
Current tax liabilities	7.3	8.9
Deferred tax liabilities	4.4	1.6
Other liabilities	1,149.2	981.9
Total Liabilities	66,213.2	66,078.0
Equity
Share capital	5,600.7	5,600.7
Share premium	16.5	16.5
Preference shares	59.9	59.9
Other equity instruments	2.9	2.9
Legal and statutory reserves	264.6	252.8
Treasury shares	(0.3)	(0.3)
Fair value reserves	35.2	(23.3)
Reserves and retained earnings	(327.8)	(51.3)
Net income for the period attributable to Bank's Shareholders	150.6	89.9
Total equity attrib. to Shareholders of the Bank	5,802.4	5,947.9
Non-controlling interests	1,084.5	997.8
Total Equity	6,886.9	6,945.7
	73,100.2	73,023.7

	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18
Net interest income	346.2	344.7	368.1	344.8	342.8
Dividends from equity instruments	1.5	0.1	0.1	0.1	0.6
Net fees and commission income	169.5	164.3	172.1	167.8	172.4
Other operating income	-71.4	-10.4	-5.2	-29.1	-61.0
Net trading income	53.5	25.1	33.4	34.4	42.6
Equity accounted earnings	15.5	21.7	34.8	19.8	21.6
Banking income	514.8	545.5	603.2	537.8	519.0
Staff costs	104.6	138.6	146.5	142.3	147.5
Other administrative costs	94.0	92.2	99.3	89.5	93.1
Depreciation	13.4	13.6	13.9	14.2	14.2
Operating costs	211.9	244.4	259.6	246.0	254.8
Operating net income bef. imp.	302.9	301.1	343.6	291.8	264.2
Loans impairment (net of recoveries)	156.1	153.6	165.1	106.1	114.8
Other impairm. and provisions	56.0	59.6	131.2	23.9	35.1
Net income before income tax	90.8	87.9	47.3	161.8	114.3
Income tax	24.3	19.7	-33.0	49.3	22.6
Non-controlling interests	27.9	24.8	27.1	26.9	28.5
Net income (before disc. oper.)	38.6	43.4	53.1	85.6	63.3
Net income arising from discont. operations	1.3	0.0	0.0	0.0	1.8
Net income	39.8	43.4	53.1	85.6	65.1

												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
	Jun 17	Jun 18	Δ %	Jun 17	Jun 18	Δ %	Jun 17	Jun 18	Δ %	Jun 17	Jun 18	Δ %	Jun 17	Jun 18	Δ %	Jun 17	Jun 18	Δ %
Interest income	957	936	-2.2%	532	496	-6.7%	425	440	3.6%	275	292	6.4%	147	145	-1.6%	3	3	-0.2%
Interest expense	278	248	-10.7%	141	111	-21.4%	137	137	0.3%	83	86	3.6%	56	53	-5.7%	-3	-2	26.3%
N et interest inco me	678	688	1.3%	390	385	-1.4%	288	303	5.1%	191	206	7.6%	9 1	9 2	0.9%	6	5	-12.3%
Dividends from equity instruments	2	1	-61.4%	1	0	-93.8%	1	1	1.1%	1	1	-3.5%	0	0	--	0	0	-29.0%
Intermediatio n margin	680	688	1.2%	391	385	-1.6%	289	303	5.1%	192	206	7.5%	9 1	9 2	1.0%	6	5	-12.3%
Net fees and commission income	330	340	3.0%	225	234	3.9%	105	106	1.1%	77	80	3.3%	16	14	-9.0%	12	12	-0.0%
Other operating income	-87	-90	-4.0%	-53	-59	-11.1%	-34	-31	7.0%	-37	-42	-12.9%	3	11	>100%	0	0	-35.6%
B asic inco me	924	938	1.6%	564	560	-0.6%	360	378	5.0%	232	244	5.3%	110	117	6.1%	18	17	-4.4%
Net trading income	90	77	-14.3%	59	46	-22.4%	31	31	1.1%	25	26	4.7%	5	4	-27.8%	1	2	60.6%
Equity accounted earnings	35	41	17.9%	19	29	48.0%	16	13	-19.1%	0	0	--	0	0	--	16	13	-19.1%
B anking inco me	1,049	1,057	0.8%	642	634	-1.2%	407	422	3.8%	256	270	5.2%	116	121	4.5%	3 5	3 2	-9.0%
Staff costs	241	290	20.0%	145	187	29.1%	96	102	6.3%	69	75	8.1%	19	19	-0.3%	9	9	6.1%
Other administrative costs	183	183	0.0%	110	108	-1.8%	73	75	2.9%	49	51	4.0%	20	21	0.3%	3	3	2.3%
Depreciation	26	28	8.5%	16	18	11.5%	10	10	3.8%	6	6	-0.1%	4	4	10.6%	0	0	5.0%
Operating co sts	450	501	11.2%	271	313	15.5%	179	188	4.8%	125	132	6.1%	43	43	0.9%	12	12	5.0%
Operating net inco me bef. imp.	599	556	-7.1%	371	321	-13.4%	228	235	3.0%	132	138	4.4%	7 3	7 8	6.7%	2 3	19	-16.2%
Loans impairment (net of recoveries)	305	221	-27.6%	258	192	-25.6%	47	29	-38.5%	29	21	-29.2%	18	14	-20.4%	0	-6	<-100%
Other impairm. and provisions	110	59	-46.5%	112	50	-55.9%	-2	9	>100%	1	4	>100%	-3	-1	74.4%	0	7	>100%
N et inco me befo re inco me tax	183	276	50.7%	1	8 0	>100%	183	196	7.5%	102	113	11.4%	5 8	6 4	11.1%	2 3	18	-18.8%
Income tax	43	72	65.5%	-1	25	>100%	44	47	6.3%	28	31	10.5%	15	13	-12.6%	1	3	>100%
Non-controlling interests	51	55	8.2%	0	-4	<-100%	51	60	16.0%	0	0	--	0	0	1.4%	51	59	16.1%
N et inco me (befo re disc. o per.)	8 9	149	67.9%	2	5 9	>100%	8 7	9 0	3.1%	7 4	8 2	11.7%	4 3	5 1	19.4%	-29	-44	-48.2%
Net income arising from discont. operations	1	2	40.0%
N et inco me	9 0	151	67.5%

Glossary (1/2)

• Balance sheet impairment – Balance sheet impairment related to amortised cost and fair value adjustments related to loans to customers at fair value through profit or loss.
• Balance sheet customer funds - debt securities and customer deposits.
• 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 corresponding to net interest income plus net fees and commissions income deducted from operating costs.
• Cost of risk, net (expressed in bp) ratio of impairment charges (net of recoveries) accounted in the period to loans to customers at amortised cost before impairment.
• Cost to core income operating costs divided by core income (net interest income and net fees and commissions income).
• Cost to income operating costs divided by net operating revenues.
• Coverage of non-performing loans by balance sheet impairments BS impairments divided by the stock of NPL.
• Coverage of non-performing exposures by balance sheet impairments BS impairments divided by the stock of NPE.
• Debt securities debt securities issued by the Bank and placed with customers.
• 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.
• 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 to customers (gross) – Loans to customers at amortised cost 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 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 total customer deposits.
• 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, equity accounted earnings and other net operating income.
• Net trading income net gains/losses arising from trading and hedging activities, net gains/losses arising from financial assets at fair value through other comprehensive income and financial assets at amortised cost.
• Non-performing exposures (NPE, according to EBA definition) Non-performing loans and advances to customers more than 90 days past-due or unlikely to be paid without collateral realisation, even if they recognised as defaulted or impaired.
• Non-performing loans (NPL) Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus nonoverdue remaining principal.

Glossary (2/2)

Operating costs - staff costs, other administrative costs and depreciation.

Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, goodwill impairment and other provisions.

Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.

Other net operating income – net gains from insurance activity, other operating income/(loss) and gains/(losses) arising from sales of subsidiaries and other assets.

Overdue loans - loans in arrears, including principal and interests.

Overdue loans by more than 90 days coverage ratio - BS impairments divided by total amount of overdue loans including installments of capital and interest overdue more than 90 days.

Overdue loans coverage ratio – BS impairments divided by total amount of overdue loans including installments of capital and interest overdue.

Return on average assets (Instruction from the Bank of Portugal no. 16/2004) – Net income (before tax) divided by the average total assets.

Return on average assets (ROA) – Net income (before minority interests) divided by the average total assets.

• Return on equity (Instruction from the Bank of Portugal no. 16/2004) Net income (before tax) divided by the average attributable equity + noncontrolling interests.
• Return on equity (ROE) Net income (after minority interests) divided by the average attributable equity, deducted from preference shares and other capital instruments.
• Securities portfolio financial assets held for trading, financial assets not held for trading mandatorily at fair value through profit or loss, financial assets at fair value through other comprehensive income, assets with repurchase agreement, other financial assets at amortised cost and other financial assets held for trading at fair value through profit or loss.

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, assets under management, assets placed with customers and investment funds.