Banco Comercial Portugues

Earnings Release • May 11, 2020

National Storage Mechanism | Additional information

Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in 1Q 2020

Banco Comercial Português, S.A. hereby informs that Bank Millennium in Poland, in which it has a 50.1% holding and whose accounts are fully consolidated at BCP group level, released today its results for 1Q 2020. Main highlights are as follows:

Profitability affected by integration costs and extraordinary provisions

• Net profit reached 18.1 million PLN (4.2 million EUR) in 1Q 2020, or 190 million PLN (43.7 million EUR) when adjusted to extraordinary items/one-offs* (stable y/y)
• 30.1 million PLN (6.9 million EUR) of integration costs related to Euro Bank, with synergies reaching 24 million PLN (5.5 million EUR)
• 55.3 million PLN (12.7 million EUR) increase of provisions related to foreign exchange (FX) mortgages legal risks
• 60 million PLN (13.8 million EUR), or 49 million PLN (11.3 million EUR) after tax, of pre-emptive Covid-19 related provisions
• Adjusted* ROE of 8.4% and Cost/income ratio of 48.3%

Higher operating income and costs influenced by the merger of Euro Bank

• Operating income grew 24% y/y
• Net interest income grew 38% y/y
• Net commission income grew 19% y/y
• Operating costs grew 35% y/y (28%, excluding integration costs), and decreased 5% q/q (excluding integration and Bank Guarantee Fund costs)

High asset quality and liquidity kept

• Impaired loans (stage 3) ratio at 4.75%
• Cost of Risk** at 108 b.p. (75 b.p., excluding pre-emptive Covid-19 provisions)
• Loans to deposits ratio at 86% 

Solid capital position and lower regulatory buffers

• Group’s Total Capital Ratio (TCR) at 19.5%, and CET1 ratio at 16.5% after incorporating full 2H 2019 profits, comfortably above requirements (15.4% and 12.2%, respectively)
• Reduction by the KNF of the FX mortgage related Pillar 2 buffer to 4.9%, in November 2019, and cut of the Systemic risk buffer to 0%, from 3%, in March 2020

Retail business

• 2.6 million active clients, a 34% y/y growth, +708 thousand new clients after one year, including +494 thousand due to the Euro Bank acquisition
• Deposits grew 32% y/y
• Loans grew 47% y/y (72%, excluding FX mortgages)
• 1.3 billion PLN (285 million EUR) in mortgages and cash loans origination, which translates in a high y/y growth of the respective loan books: 57% and 31%, respectively
• Accelerating the new microbusiness accounts acquisition pace, +20 thousand net growth of active accounts (24% of new accounts were opened online)
• 96 thousand microbusiness clients

Companies business

• Current accounts volumes grew 39% y/y
• Growth of loans to companies: 7% y/y
• Growth in factoring turnover of 6% y/y
• Growing number and volume of transactions in corporate business

Support for Clients during the Covid-19 epidemic

Retail Clients:

• Credit moratoria, temporary deferral of principal and interest instalments
• Contactless card transactions up to PLN100 (23 EUR) without PIN confirmation
• Most transactions can be done safely and remotely from home
• Fully online current account opening, with the use of selfie
• Website and banner communication on the portal, dedicated to this thematic

Micro-companies and corporate customers:

• Applications for the Polish Development Fund financial support (subsidy with redemption possibility) in Millenet, available for micro businesses and SMEs
• Temporary suspension of loan instalments, including factoring, leasing and charge cards, available for all companies
• Quick and simplified process of credit renewal, available for SMEs and large companies
• State Development Bank (BGK) guarantees under new and more favourable conditions for micro businesses and SMEs (de minimis guarantee)
• Credit lines supported by BGK’s Liquidity Guaranties Fund, available for medium and large companies
• Possibility of remote signing of all agreements, available for SMEs and large companies

Quality and Innovations

• Highest NPS ratio (52) among Polish banks
• Best Trade Finance Provider in Poland for 2020, according to Global Finance
• 1.7 million downloads of the Millennium Goodie app – smartshopping platform

(*) without one-offs: in 1Q20: 1) integration costs: PLN 30.1mn (6.9 million EUR), 2) PLN 55.3mn (12.7 million EUR) provisions for FX mortgage legal risk, 3) proactive Covid-19 provision of PLN 60mn (13.8 million EUR), 4) linear distribution of BFG resolution fund fee of PLN 58.2mn (13.4 million EUR); in 1Q19: 1) integration costs: PLN 2mn (459 thousand EUR), 2) PLN 26.9mn (6.2 million EUR) release of tax asset provision, 3) linear distribution of BFG resolution fund fee of PLN 73.3mn (16.8 million EUR)

(**) on gross loans.

End of announcement

Banco Comercial Português, S.A.

Attachment

• Resultados Pol&243;nia 1T20 EN