CTT-Correios de Portugal

Investor Presentation • Nov 19, 2015

DISCLAIMER

This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the CTT Capital Markets Day 2015. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason or purpose without the express and prior written consent of CTT. This document (i) may contain summarised information and be subject to amendments and supplements, and (ii) the information contained herein has not been verified, reviewed nor audited by any of the Company's advisors or auditors. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any of the information contained in this document. Consequently, the Company does not assume liability for this document if it is used for a purpose other than the above. No express or implied representation, warranty or undertaking is made as to, and no reliance shall be placed on, the accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, affiliates, directors, employees or advisors assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement.

This document has an informative nature and does not constitute, nor must it be interpreted as, an offer to sell, issue, exchange or buy any financial instruments (namely any securities issued by CTT or by any of its subsidiaries or affiliates), nor a solicitation of any kind by CTT, its subsidiaries or affiliates. Distribution of this document in certain jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. Moreover, the recipients of this document are invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Market Commission's website (www.cmvm.pt). In particular, the contents of this presentation shall be read and understood in light of the financial information disclosed by CTT through such means, which prevails in regard to any data presented in this document. By attending the meeting where this presentation is made and reading this document, you agree to be bound by the foregoing restrictions.

FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. All the statements herein which are not historical facts, including, but not limited to, statements expressing our current opinion or, as applicable, those of our directors regarding the financial performance, the business strategy, the management plans and objectives concerning future operations and investments are forward-looking statements. Statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "believes", "anticipates", "will", "targets", "aims", "may", "would", "could", "continues" and similar statements of a future or forward-looking nature identify forward-looking statements.

All forward-looking statements included herein involve known and unknown risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, performance or achievements to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the results of our operations, growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and regulatory framework or conditions).

Although CTT believes that the assumptions beyond such forward-looking statements are reasonable when made, any third parties are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of CTT, what could cause the models, objectives, targets, plans, estimates and/or projections to be materially reviewed and/or actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neither constitute a representation nor a commitment regarding the models and plans to be implemented, nor are they guarantees of future performance, nor have they been reviewed by the auditors of CTT. You are cautioned not to place undue reliance on the forward-looking statements herein.

All forward-looking statements included herein speak only as at the date of this presentation. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Agenda

II

I Company overview

Three-year performance highlights

III Strategic update

IV Banco CTT strategic update

V 2020 business ambition

Company overview

The postal services industry is going through a significant transformation phase

Company overview

CTT is a dynamic postal services operator with a balanced portfolio of businesses…

¹ Revenues by business unit including CTT Central Structure and Intragroup Eliminations.

… leveraging on its unique networks and iconic brand

7

CTT Retail & Distribution networks ¹ National and international recognition (awards)

¹ As at 30 September 2015; ²1H15, except for BPI and Millennium which have reported the number of branches as at 30 September 2015; ³ Ramp-up of Banco CTT to up to 603 CTT post offices in the first three years and 1 own branch.

Reporting consistently strong results since the IPO, delivering on the promise…

Industry-leading EBITDA margins ³

8 ¹Reported revenues including income related to CTT Central Structure and Intragroup Eliminations; ² Excluding non-recurring revenues and non-recurring costs; ³ Source: Annual Reports – excluding non-recurring items. Royal Mail fiscal year ends in March (e.g. 2015 refers to the period between Apr-14 and Mar-15).

…with a proven track record of shareholder value creation

¹ Bloomberg, 16 November 2015; PSI20 rebased to CTT IPO share price; ² Peers included are: Austrian Post, Bpost, Deutsche Post, Royal Mail Group and Post NL; ³ Accelerated bookbuilding (ABB).

CTT presents a distinctive and attractive equity story

Established and sustainable business model

Three-year performance highlights

Three-year performance highlights

Reversing the revenues declining trend sets CTT on a sustainable growth path

1 Including income related to CTT Central Structure and Intragroup Eliminations.

Three-year performance highlights

Networks and headcount optimisation measures produce efficiency improvements

13 INTEGRATION OF THE MAIL AND E&P DISTRIBUTION NETWORKS IN 2014 & 2015 (TO BE DETAILED FURTHER ON)

Transformation Programme initiatives result in Staff and ES&S costs reductions

Recurring Staff and External Supplies & Services costs € million; CAGR %

Circa 5% of the 2012 recurring Staff and ES&S costs base taken out of the business in 3 years (excluding Banco CTT project costs)

RENEGOTIATION OF THE IT AND COMMUNICATION SERVICES CONTRACTS COMPLETED IN 2014

Resulting in €14m annual cost savings (with IT and telecoms) from 2015 onwards

INTEGRATION OF THE MAIL AND E&P DISTRIBUTION NETWORKS COMPLETED IN 2015

Resulting in €2.7m cost savings (with outsourced parcel distribution), of which ~€1m in 2015 and the remaining from 2016 onwards

HEALTHCARE PLAN PROVIDER CHANGE / RENEGOTIATION AND NEW COMPANY AGREEMENT

• 2016 additional €1m savings net of salary increase of 2% in 2015 (only in 2H16)
• 2017 additional €2.5m savings net of salary increase of 2% in 2015

2015 COSTS IMPACTED BY BANCO CTT LAUNCH (WITH NO REVENUES YET)

€2.8m of Banco CTT recurring Staff, ES&S and other costs included in the 9M15 accounts

REINSTATEMENT OF VARIABLE REMUNERATION

In 2014 accounted for only at the end of 4Q and considered as non-recurring

Healthcare benefits optimisation measures strengthen the Balance Sheet

Evolution of the value of the post-employment benefits (Healthcare & Other) € million

Liabilities reduced by €21m

¹ Mainly due to discount rate revision from 4.0% to 2.5%; ² Excluding share plan; ³ Annualised estimate. 9M15 financial cost reduction of €3.3m.

Revenues stabilisation & cost optimisation measures drive strong EBITDA growth

Financial performance

Revenues in € million; revenues per head in € thousand; costs & EBITDA as % of recurring revenues

¹ Excluding non-recurring revenues and non-recurring operating costs affecting EBITDA.

Solid cash flow generation & low Capex needs result in strong dividend payment growth

¹ Adjusted operating free cash flow as percentage of Net income (i.e. excluding changes in net Financial Services payables).

Updated 2015 outlook

Acctt
CAPITAL MARKETS
DAY LISBON 2015

Revenues & volumes	 Addressed mail volumes estimated to decline in the [-3% ; -4%] range, better than the -5% initial target  Growth in revenues for a second year in a row, supported by all business units and Altice's MoU
Operating costs & EBITDA	 Like-for-like (excluding Banco CTT project) recurring costs to decline, but full impact of efficiency measures only in 2016  Management is confident in high single-digit growth in "like-for-like" recurring EBITDA (excluding Banco CTT project costs)
Earnings & dividend	 The Board is confident that it will be able to propose a minimum dividend of €0.47 per share (€70.5m for 150m shares outstanding, 6.8% growth on a recurring base) for the financial year 2015, payable in 2016

Strategic update

CTT has a well-defined strategy leveraging on its competitive skills and advantages

CTT has a well-defined strategy leveraging on its competitive skills and advantages

Volumes evolution and ANACOM forecasts ¹ (% change y.o.y.)

Mail volumes decline expected to continue CTT prices have increased, but are still lower than peers' ²

Price evolution 2011 – 2015 (% change y.o.y.)

Nominal price for a domestic standard letter – selected peers ²

More aggressive market approach, positioning CTT as an expert in Advertising Mail within the advertising market (i.e. for agencies, advertisers and clients…)

… increasing the budget allocated to Advertising Mail in advertising investments in Portugal and capturing value in the digital Direct Mail (DM) market

Target weight of Advertising Mail in CTT revenues ¹ Key initiatives to implement

• CTT Advertising Mail revenues as % of 2014 reported revenues (base-case)
• CTT potential additional revenues from planned initiatives as % of 2014 reported revenues

Creation of an online platform to enable SMEs to create and manage Advertising Mail campaigns

Inclusion of digital marketing solutions in the platform

Rebrand the Advertising Mail product offer

Approach to creative and media agencies through dedicated teams and knowledge sharing

• End-to-end solution that enables clients to buy, manage and send Advertising Mail campaigns from an online platform
• Provide digital solutions such as e-mail, sms, social media and voice messages enabling the management and implementation of hybrid DM campaigns
• Creation of a new name for the Advertising Mail offer aiming to reinforce the CTT repositioning in this business
• Create incentive campaigns in order to influence agencies' recommendations to advertisers
• Knowledge sharing to align mindsets and communicate DM effectiveness

¹ Calculated based on CTT 2014 reported revenues; ²Advertising Mail revenues as % of 2014 reported revenues (Annual Reports).

III. Physical / digital mail transition – complement the postal offer

CTT digital offer transition positioning

• Combine purely digital communication with mixed approaches i) physical / digital and ii) digital / physical to mitigate the negative impact on mail volumes declines and leverage the power of physical communication
• Offer integrated solutions based on cutting-edge technology and several other CTT services, in order to ensure end-to-end business solutions
• Upgrade the digital offering with new services adding value for our customers that have already decided to communicate digitally
• Make our digital mobile offering customer-friendly
• Provide mechanisms to ensure greater autonomy and convenience to customers (e.g. SMEs) in the delivery of digital documents for distribution
• Promote easy and convenient usage of services through web application that exhibits the portfolio of geographical services

24

IV. Efficiency programmes – initiatives for operations and network optimisation

Maintaining a strong focus on efficiency in order to sustain an operation of excellence

Optimisation of the Healthcare liability reduced xxx by €22m transport network, sorting operations and distribution network

CTT has a well-defined strategy leveraging on its competitive skills and advantages

Strategic update | Capture the growth trend in parcels I. Offer upgrade – innovative solutions to the product portfolio

Seize the opportunity in e-commerce: full adaptation to customers' needs and required product features

New modular and upgraded offer being developed New CTT Expresso digital channel strategy

Extended PuDo network (>1,000 points)

branches (postal

>140 stores of the largest appliance / electronics retailer in Portugal

3 large eretailers already using the service

agencies) Keep up with technological trends and improve customer experience Strategic update | Capture the growth trend in parcels II. E-commerce initiatives – promoting innovation

E-commerce defines a new paradigm for B2C / C2X offer… … to which CTT is adapting by promoting innovation

Simplicity

The delivery experience as part of the online process – avoid complexity shock

Convenience

Adjust for different lifestyles and schedules (anywhere / anytime)

Flexibility

More propensity to changes in plans during the process and adaptation to "customers' needs and wants"

Interactivity

Information, predictability, interaction and track & trace

1. Postal virtualisation solution

• Enable e-buyers to order their products from several sellers to a virtual address in the e-seller's country, being shipped in bulk to a local warehouse
• After payment, CTT undertakes to pay duties and taxes to customs on behalf of the e-buyer and deliver the parcel

2. Easy shipping for C2C

• Partnership with the biggest Portuguese C2C online platform (OLX, 150,000 registered users and 3,000 new daily advertisements)
• Online pre-advice information fulfilment that enables a simplified process of physical shipment at a CTT post office

3. Linehaul solution

• Modification of the physical and informational flow aiming to simplify the process and implement best delivery timings
• E.g. items will be packed with proper label by seller allowing the last-mile delivery without relabelling

€ million

% of CTT Expresso volumes delivered by the Mail network

V. Spain: Turnaround – focus on improving the profitability of Tourline

Initiatives	Key actions	Short-term impact (YTD)	Future levers
Maximise the value of the franchisees	• Reorganisation / rationalisation of the network of franchisees • Increase control and scrutiny over the network of franchisees, mostly new entries • New franchisee distributors to increase capillarity	- Loss of business due to exit of franchisees - Write-offs / impairments Increased operating costs - by expanding direct operations (temporary)	• Capture full market potential • ~€3.5b market with 4.4% y.o.y. growth (in 2014) 1 • Consolidation upside (highly fragmented market with ~7 thousand companies 1 )
Improve performance in direct operations	• Improve commercial effectiveness by creating a new commercial task force and strengthening direct relationship with clients	Average price increase in + own areas (still marginal) and improvement in the pricing structure (price vs. weight vs. delivery times)	• Lever on a robust, commercial driven and nationwide network of franchisees to ensure: • Optimisation of delivery costs • Scale and capillarity
Optimise central costs	• HR optimisation – adjust the cost structure of Tourline to its current operations	- Increase in non-recurring Staff costs	• Volume increase • Increase efficiency in central and own operations and price optimisation in line with market
Organisational structure and information	• New management team with strong local experience • New management information systems (e.g. data reliability and accountability)	N.A.	boundaries • Reinforce our integrated Iberian offer, important for large clients with cross-border needs
	Turnaround plan in motion with medium / long-term initiatives	Negative impact on short-term results	Close monitoring of results to ensure sound strategic decisions 31

CTT has a well-defined strategy leveraging on its competitive skills and advantages

I. Widen the Financial Services offer – track record

Successful track record in selling financial services products

	Partnerships	1 Weight	Future objectives
Savings and insurance • Public debt certificates • Retirement savings plans • Life insurance • Non-life insurance		41%	• Maintain the well-established relation with the Government (IGCP) for the sale of public debt certificates • Launch of healthcare insurance expanding to a full offer of insurance products	Highlight on future Healthcare Insurance product • Partnership with
Payments • Postal charges • Tax collection • Toll collection		39%	• Expanded tax payments in the Payshop network • Enlarged commercial offer for bill issuers integrating physical and remote payment channels	a leading provider to sell healthcare insurance • Associated features: home
Transfers • National money orders • International money orders • Western Union		16%	• Fixed customer base (~700,000 people) for social benefits money orders, of which ~50% collect their money within the CTT Retail Network • Potential to maximise the value of these customers to CTT by transferring them to Banco CTT	healthcare services, emergency transportation, hotline for emergencies and support,
Credit & other • Consumer credit • Credit cards		4%	• Launched in mid-2014 • Credit cards launched in April 2015 • Increase commercial effort on existing products	equipment rental, etc.
		Revenues in 2014: €73.9m		34

¹ Weight in 2014 Financial Services recurring revenues.

CTT has identified an opportunity to launch a banking operation based on a no-frills concept which the market may consider better than their current offer

Source: Market study performed by CTT (1,507 interviews representative of the Portuguese population conducted during May 2015).

Strategic update | Launch Banco CTT to expand Financial Services III. Migration of Financial Services to Banco CTT SAVINGS & INSURANCE Public debt certificates Life insurance Non-life insurance PAYMENTS Post offices Tax collection Payshop TRANSFERS National money orders International money orders Western Union CREDIT & OTHER Consumer credit Credit cards Provider Multiple Staying in FS Migrating to bank 2014 revenues ¹ Initial plan Revised plan Migration to Banco CTT €29m €2m €8m €3m €0m €1m €0m €16m Initial plan: Revised plan: €29m Initial plan: €13m Revised plan: Year 1 with ramp-up Year 0 with ramp-up Year 0 Year 3 Year 0 Year 0 Year 0 Year 3 Year 1 with ramp-up Year 1 with ramp-up

NO MIGRATION OR MIGRATION WITH RAMP-UP (OR AT A LATER STAGE) WILL MEAN LESS REVENUES FOR THE BANK

CTT has a well-defined strategy leveraging on its competitive skills and advantages

LEVERAGE ON THE SCALABILITY OF OUR ASSETS

• I. OPTIMISATION INITIATIVES – POST OFFICES SEGMENTATION AND PORTFOLIO DEFINITION
• II. DISTRIBUTION / RETAIL PARTNERSHIPS (CITIZEN'S BUREAU SERVICES, OTHERS)

Assessment of 3rd party product portfolio to sell in the Retail Network Segmentation of post offices for future optimisation

Analysis aimed at maximising value generated per minute and per sq. meter

• Core criteria:
• i. Idleness
• ii. Banco CTT opening with specific service desks within post offices

Goals and future application of post offices segmentation:

• Support the prioritisation of future investments
• Define turnaround action plans for post offices below their full potential

4 types of post offices have been defined: Brief characterisation of the 5 defined segments:

38 Note: The analysis considered 601 CTT post offices. The remaining post offices at the time were 5 post offices established in partnerships, 12 corporate mail delivery desks, 4 mobile post offices and 1 post office opened in 2014 (Cascais II) with no representative data; ¹ Revenues for which each post office is accountable.

Areas

II. Distribution / Retail partnerships – increase value added services

Examples of CTT partnerships

Available services

PT Portugal

Telecommunications & multimedia operator

• Sale of PT Portugal products and services

EDP

Leading company in the energy sector

• Integrated payment offer for utilities
• Client capture and contract signature

• Toll payments

Implementation timeline

• Driving license renewal
• Residence permit scheduling renewal
• Registering foreign workers' contracts
• Registering intellectual property
• Notarial or judiciary certificates requests
• Scheduling an appointment at the hospital or healthcare centre
• Real Estate, Civil or Commercial certificates requests
• Reimbursement requests concerning health expenses

People and technology are key for the CTT growth objectives

CTT has implemented a new organisation model to approach innovation

CTT UNIVERSE

Strategic development backed by solid financial position

Anglo-Saxon corporate governance model adopted

43 ¹ Full compliance with CMVM's Corporate Governance Code recommending (i) separation of Chairman / CEO or (ii) combined Chairman / CEO and Lead Independent Director promoting the nonexecutives' oversight role and an informed decision-making process; ² Committee responsible for assisting the Board and the Remuneration Committee (as applicable) on governance matters, directors' and key officers' selection, succession plans, remuneration policy and performance evaluation; Chairman / CEO prevented from voting in case of conflict of interest.

Applicable governance framework

Governance model – main allocation of responsibilities

BOARD OF DIRECTORS	• Approving CTT's strategic and risk profile, objectives and policies • Establishing the strategic, business, investment and financial plans • Ensuring the effectiveness of the risk management system, internal control and internal audit • (Dis)Investments above certain thresholds or within / outside certain geographic or business areas and financing above €150m or 5 years • Approving the financial statements and dividend policy (both presented to be voted in the General Meeting) • In general, approving the transactions above €50m and oversight of the management
EXECUTIVE COMMITTEE	• Day-to-day management of CTT
AUDIT COMMITTEE	• Oversight of the quality and integrity of the financial information, in particular (i) monitoring the compliance with the accounting standards and (ii) issuing an opinion on the financial statements • Supervision of the risk management system, internal control and internal audit • Hiring, evaluation and replacement of the statutory and external auditor and monitoring the respective independence
GOVERNANCE, EVALUATION & NOMINATING COMMITTEE	• Supervision of governance matters, formulating to the Board recommendations concerning corporate governance requirements and good practices, conflicts of interest, incompatibilities, independence and expertise • Leading the annual evaluation of the Board's performance • Proposing policies to the Board regarding appointments, succession planning and Board qualifications • Assisting the Remuneration Committee on the remuneration policy and performance evaluation of the Executive Directors of the Board

Banco CTT strategic update

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

CTT is well positioned to launch a differentiating bank in the Portuguese market

There is an opportunity to launch a banking operation in the Portuguese market, with a bias towards more conservative clients of average / low income

CTT's Retail Network is highly dense and has available capacity, allowing for low marginal costs

CTT already possesses a vast experience in a wide range of financial services

Launch of a banking operation based in CTT's Retail Network and on the principles of proximity, simplicity, transparency and value for money

Balance Sheet structure Ownership structure Return Customer base Product strategy Main value proposition Network and distribution model Many postal banks have common characteristics along key dimensions… … which are also being replicated by Banco CTT Value proposition structured around four key principles: proximity, simplicity, transparency and value for money 1

Main value proposition
Customer base	Many postal banks have common characteristics along key dimensions…	… which are also being replicated by Banco CTT
Product strategy	2	Main target is the retail market, with a bias towards the
Network and distribution model	mass market Large and homogeneous potential customer base coming from the postal operator's daily activities
Ownership structure
Return
Balance Sheet structure

Main value proposition
Customer base
Product strategy
Network and distribution model	Many postal banks have common characteristics along key dimensions…	… which are also being replicated by Banco CTT
Ownership structure	Strong leverage of the postal operator's retail 4
Return		infrastructure by the banking player
Balance Sheet structure		Up to 603 CTT post offices 1 • with fast ramp-up (positioning itself as one of the largest banking networks in Portugal)

⁵² 1 The maximum number of Banco CTT branches is 604, with a maximum of 603 post offices and 1 Banco CTT own branch. The remaining post offices do not meet the minimum requirements to accommodate the bank (e.g. mobile post offices).

Main value proposition
Customer base
Product strategy
Network and distribution model
Ownership structure	Many postal banks have common characteristics along key dimensions…	… which are also being replicated by Banco CTT
Return Balance Sheet structure	Close control of postal 5 banks by the postal operator, with selected partnerships for certain financial products / services (from fully owned to JVs)	• CTT as the sole shareholder of Banco CTT

Main value proposition Customer base Product strategy Network and distribution model Ownership structure
Return	Many postal banks have common characteristics along key dimensions…	… which are also being replicated by Banco CTT
Balance Sheet structure	6 (physical and human) and low-cost operations	Strong profitability, leveraging on existing infrastructures • Banco CTT expected to reach break-even in the 3rd year (before shared costs with CTT)

Main value proposition Customer base Product strategy Network and distribution model Ownership structure Return
Balance Sheet structure	Many postal banks have common characteristics along key dimensions…	… which are also being replicated by Banco CTT
	7 lower risk appetite	Postal banks with low Loan-to-deposit ratios 1 , denoting a • Target Loan-to-deposit ratio of Banco CTT circa 50%

CTT clients and 35-54 years old segment most interested in the bank's value proposition

Participants interested in subscribing to Banco CTT's offer

Delta vs. average

Percentage points

56 ¹Clients that made at least one transaction in CTT post offices in the last six months (estimated clients ~3.7m in 2014).

Source: Market study performed by CTT (1,507 interviews representative of the Portuguese population conducted during May 2015).

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

Banco CTT will leverage on the existing CTT network

Geographical distribution of CTT's post offices

Banco CTT expected to benefit from the capillarity of its network, with a higher share of presence

(measured in terms of total number of post offices) in rural areas than other Portuguese banks

Roll-out of Banco CTT will be completed in 3 years, with a clear operational delivery model in place

Operational delivery model ¹

Post offices with Banco CTT dedicated space 83

Post offices with Banco CTT dedicated counter 250

Post offices with multifunctional counters Up to 270

Banco CTT's launch will be a two-stage process

¹Adjusted to the date of availability of each product as described further on.

Note: image is illustrative, therefore not representing the exact location of Banco CTT branches.

Banco CTT is investing significantly in training of postal employees

1 Banking training	Offer, processes & 2 systems	Behavioural & 3 commercial	Money laundering 4 prevention
▪ Training in banking to develop the technical and commercial skills required for providing high-standard banking services to clients ▪ Topics covered include, among others: – Financial system – Bank accounts & deposits – Savings & investments – Payment systems – Credit to individuals – Commercial activity	▪ Provide an overview of Banco CTT's strategy, positioning, operating model and product portfolio ▪ Instil Banco CTT's value proposition ▪ Train front-office processes, namely: – Account opening, deposits & withdrawals and product activation & management – Branch management & cash handling – Payments services – Digital channels	▪ Improve employees' soft skills necessary to implement Banco CTT's strategy ▪ Train desired behaviours in practical contexts related to a banking activity ▪ Shape employees' interactions with clients to the requirements of a banking setting ▪ Support understanding of the new organisational setting with the bank's launch and prepare employees to act as change agents	▪ Improve understanding on money laundering impact and importance of robust controls ▪ Discuss most common signs of suspicion and their applicability in CTT's daily operation ▪ Train employees on Banco CTT's controls and on how to deal with likely day-to-day situations
+40,000 hours in banking training up to now		+500 employees have concluded the initial banking training	>€1.5m investment in training of Retail Network employees until the end of roll-out

TRAINING OF THE RETAIL NETWORK EMPLOYEES AS A KEY SUCCESS ELEMENT OF BANCO CTT

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

Product strategy

Portuguese market figures form the base for our planning

CAGR %

¹Information from the Bank of Portugal as at December of each year (except for 2015, where data refers to September); ² Information from the Bank of Portugal as at September 2015.

A clear product strategy guides this offering

DEPOSITS

• Appealing value proposition (simplicity, proximity, transparency and value for money) and Banco CTT's perceived low risk and absence of legacy as competitive advantages to attract customers in current flight-to-safety environment
• Bulk part of funding to be derived from customer deposits
• o Deposits and savings products: pricing in line with the market, relying on value proposition to attract depositors
• o Currents accounts: no maintenance fees
• Bias towards mass market translated into a higher market share in customer accounts than deposits

CREDIT

• Credit strategy: low cost of risk, gradually increasing Balance Sheet exposure to credit risk as operation matures
• Mortgage: low risk and competitive pricing
• Consumer loans: competitive through a partnership with Cetelem

FEE-GENERATING BUSINESS

• Transactional products as a core characteristic of the bank's DNA
• Strong cross-selling potential with CTT's existing Financial Services products, providing a complete and unique offering to target customers

Product strategy

Banco CTT's offer reflects the company's principles of simplicity and value for money

Banco CTT's offer

¹ Migration will happen progressively as the bank is rolled-out to CTT post offices; ² Retirement savings plans. 65 Note: Migration dates subject to future revision as they are contingent on on-going negotiations with partners.

Banco CTT is expected to have a higher market share in accounts than in deposits

¹Excluding estimated 1 million enterprise accounts from "Associação Portuguesa de Bancos" (APB – Portuguese Banking Association) reported figure 12.6 million active accounts in 2014; 2 Including consumer and other loans; ³Market share estimates based on the assumption that in the long run the credit market will progressively recover to historical levels. Source: Bank of Portugal; Associação Portuguesa de Bancos.

Product strategy

Both client acquisition and product penetration ambition is aligned with other EU postal banks

Market share by product for the local postal banking player Postal banks with more than 10 years of activity; 2014

¹ La Banque Postale only introduced consumer loans in 2010; ² BancoPosta market share in deposits driven by its stronghold in savings accounts (market share of ~18%); ³ BancoPosta does not have banking license to issue credit, only sells third-party credit products (2011 figures).

Source: Bank of Italy; Banque de France; La Poste Annual Report; Poste Italiane Annual Report; Postabank Annual Report, Bawag Annual Report; GfK market research.

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

Key financials ambition

Sustained improvement in value creation over time is anchored in 4 main key success factors

Banco CTT's financials ambition

¹Including net interest income (both from credit operation and financial investments) and net commission income.

²Market share calculated as a percentage of active bank accounts in Portugal (12.6m according to Associação Portuguesa de Bancos).

³Excluding shared costs with CTT, impairments, provisions and taxes.

Key financials ambition

Long run aspiration for Cost-to-income ratio to lean towards ~50%

Banco CTT's financials ambition

OPERATING COSTS (before shared costs with CTT)

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

Business plan update led to upward adjustments in capital needs until 2020

• Target capital (additional capital to meet 15% CET 1 target) Banco CTT intends to launch and implement its strategy with solid capital ratios, in line with its value proposition and CTT's robustness
• Accelerated roll-out The faster implementation of Banco CTT throughout CTT's network will strengthen banking activity in the initial years, thus improving results and adjusting capital needs downwards
• Third-party products remaining in CTT FS Some third-party products will continue to be offered by CTT FS (e.g. Payshop and tax collection, but having an "integrated" approach in the front-office)
• Third-party products offered later than initial plan Initial plan considered that third-party products would be offered by Banco CTT from day 1 in all the post offices but they will now migrate with the ramp-up of bank branches

¹ Phased-in.

² Half-year results.

Strong investment needed in the initial years to support the bank's launch

CTT's projected investment in Banco CTT (2016E-2017E) € million

Impacting reported EBITDA

Alignment between CTT and Banco CTT to successfully deliver the project

¹ Excluding revenues that migrate from CTT; ² Incremental spending related with the implementation of the bank in the CTT post offices.

2016E 2017E

Banco CTT – Strategic update

Network and distribution model

Product strategy

Key financials ambition

Capital and investments estimates

Calendar and conclusions

The implementation of the project is on track

To summarise…

Banco CTT's objectives

Capture the strong market opportunity (more than 25% of the Portuguese market willing to subscribe to Banco CTT's offer), leveraging existing CTT clients and an appealing value proposition

Benefit from the capillarity of the CTT Retail Network and its proximity with customers

Focus on a complete but simple product portfolio, with strong positioning on current accounts, savings accounts, cards and mortgages

Sustain a solid performance, leveraging cost advantage arising from synergies with CTT (HR and real estate) and low cost operations

Maintain a conservative Balance Sheet with low Loan-todeposit ratios, focusing on low-risk mortgages and on the partnership with Cetelem for consumer loans

Banco CTT long-term aspiration ¹

• Customer accounts	~1m
• Mkt share in deposits & savings	3-4%
• Mkt share in mortgage production	5-6%
• Cost-to-income ratio	<50%
• Break-even (before shared costs)	3 years
• ROE	~15%
• Loan-to-deposit ratio	~50%
• Core-tier 1 ratio	~15%

2020 business ambition

Mail (including Retail Network offer)

CTT 2020 ambition – Express & Parcels

Express & Parcels Portugal

Given the ongoing restructuring process in place, no outlook is provided for Spain

CTT 2020 ambition – Financial Services (including Banco CTT)

Financial Services (including Banco CTT)

CTT Investor Relations

Contacts:

Phone: +351 210 471 857 E-mail: investors@ctt.pt