Banco Comercial Portugues

Investor Presentation • Jan 22, 2014

Investor presentation

Updated following DG Competition decision

DISCLAIMER

• This document is not an offer of securities for sale in the United States, Canada, Australia, Japan or any other jurisdiction. Securities may not be offered or sold in the United States unless they are registered pursuant to the US Securities Act of 1933 or are exempt from such registration. Any public offering of securities in the United States, Canada, Australia or Japan would be made by means of a prospectus that will contain detailed information about the company and management, including financial statements
• The matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of BCP to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond BCP's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of regulators and other factors such as BCP's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which BCP operates or in economic or technological trends or conditions, including inflation and consumer confidence. Attendees at this presentation are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Even if BCP"s financial condition, business strategy, plans and objectives of management for future operations are consistent with the forward-looking statements contained in this presentation, those results or developments, as well as BCP past performance, may not be indicative of results or developments in future periods. BCP expressly disclaims any obligation or undertaking to release any updates or revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law
• The information in this presentation has been prepared under the scope of the International Financial Reporting Standards ("IFRS") of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002
• The figures for Greek operation were restated in 2012 following the process of discontinuing this operation and aggregated into a single income statement item defined as "Income arising from discontinued operations"

• Values for the first six months of 2013 were subject to limited revision by External Auditors

• 1. DG Competition decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

DG Comp agreement ...

Approval by the European Commission of the restructuring plan for BCP for the period until the end of 2017
Main commitments	 Scale down in Portugal through the reduction of branches and employees, implying a reduction of ~25% of staff costs in 2015 vs 2012 Conditional sale of its equity holding in BCP Poland, if and only if BCP does not repay €2.3 billion  euros of CoCos by December 2016  Sale of:  Its 100% holding in MGA (Millennium Asset Management)  The loan books of BCP Cayman Islands and BCP Switzerland  Its 100% equity holding in Banca Millennium (Romania)  The entire shareholding in Piraeus  Achieve the following key ratios:  Maximum of 120% LTD ratio in 2015-17 (123% in Jun 13)  Maximum CIR of 50% in 2016-17 (77% in Jun 13)  Maintain a minimum CT1 ratio that meets statutory solvency levels (12.5% in Jun 13)  ROE higher than 10% in 2016-17  Split its existing activities into two parts: the core unit and the non-core unit (real estate development and land acquisition, securities-backed lending, construction subcontractors, football clubs, highly-leverage secured lending and subsidized mortgages)
General restrictions	 Ban on acquisitions  Ban on aggressive commercial practices  Remuneration of corporate boards and employees oriented towards long-term company objectives  Business restrictions with related parties  Ban on dividends, coupon payments (if not legally mandatory) and buy-backs  Ban on financing the purchase of shares or hybrid capital issued by BCP

... implying an update of the Strategic Plan

Main guidelines:

Formal approval of the restructuring plan by the European Commission was achieved

Additional reduction of operating costs in line with the effective demand for banking services preserving the profitability in a more conservative macro scenario

Lower risk exposure (Greece and non core) implies fewer RWA, maintaining the same ROE target

International presence with a clear focus on core activities (Poland, Mozambique and Angola) and without any type of value destruction constraint, driving the bank growth

Feasible strategy, less dependent on external factors and more on the Bank's execution ability

... implying an update of the Strategic Plan

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

Investment highlights

Macroeconomic stabilization in Portugal	 Portugal continues to deliver on its commitments, starting to present some turnaround in important macro indicators  Investors have began to recognise that Portugal is on the right track, as reflected by the fall in the 10-year government yield from a peak of 17.4% (January 2012) to 6.6% at end July 2013 and the first market issue of 10-year Portuguese Bonds after the bail-out
Recovery of profitability in Portugal	 BCP continues to enjoy a strong market position in Portugal and the strategic plan is based on the following assumptions for the Portuguese business: – The focus in SME and corporate segment, the reduction of cost of deposits, the end of extraordinary negative items and the slowly improvement of market rates should imply a recover of NII from 47 bp in 1H13 to ~150 bp at the end of 2017 – The operational structure should shrink, implying a reduction of around 25% on staff costs from December 2012 to December 2015 (a portion of this effort has already been carried out) – Cost-of-risk should decrease from its peak (208bp in 2011) to less than half in 2015/17, with the economic stabilization and improvement in risk control processes
International growth	 BCP"s growth based on a strong businesses dynamic in Poland, Mozambique and Angola, self funded operations and an important contribution to the profitability and growth of the group (increasing the contribution to banking income from 21% in 2009 to 44% in 2017)
Funding based in deposits	 Further deleveraging, now at a slower pace, and centered on growth of on-balance sheet customer funds, contributing to lower wholesale and ECB funding needs. ~100% of bank"s lending activities by 2017 funded with customer funds
Capital above regulatory requirements	 BCP intends to repay €3bn of hybrid instruments (CoCos) issued by the State and to be always well above regulatory minimums BoP (10%) and CRD IV (7%)

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

Portugal: macro imbalances led the country to apply for a Financial Assistance Program producing its first results...

A. Fiscal consolidation

Budget deficit decreases…

Source: Ministry of Finance (DEO, 30 April 2013)

…and debt expected to peak by 2013/14…

Source: : Ministry of Finance and European Commission

…leading to normalization of yield levels

B. Structural transformation...

• Structural changes in the economy and the public sector are being undertaken to increase the external competitiveness of the country and of the private sector
• An example of the impact of the measures implemented is the new labour code

Competitiveness: Labor cost index

The positive impact of the structural changes is expected to be observed in the near future with the trade balance and real GDP improving

Source: Ministry of Finance and European Commission

Source: Ministry of Finance and European Commission

… already showing positive signals

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Source: INE

Exports growth index

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Source: Bank of Portugal

Quarterly GDP growth rate Unemployment rate

Industrial production index

C. Maintaining stability of the financial sector

Higher confidence of customers on the financial system

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

Main drivers and targets

Stages	Priorities Main drivers Main targets
Demanding economic environment (2012-13)	Stronger balance sheet	Reduce WS funding dependence		1H13	2015	2017
Creating conditions for growth and profitability (2014-15)	Recovery of profitability in Portugal	Recovery in operating income	CT1 (BoP)	12.5%	~12%	~12% ~10% (CRD4 2019)
		Additional reduction in operating costs	* LTD	110%	<110%	~100%
			Cost
	Continuous business		of risk (bp)	155	~100	<100
	development in Poland, Mozambique and Angola	Adopt strict limits to risk taking	C/I	77%	<55%	<45%
Sustained growth (2016-17)	Sustained growth results, with improved balance between domestic and international operations	Wind down or divest the non-core portfolio	ROE	-32%	~10%	~15%

Updated strategic plan, based on a more conservative scenario and higher costs reduction, with lower execution risk and sustained profitable growth

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

Three drivers to recover profitability in Portugal: boost operating income, increase operating efficiency and limit risk taking

Improvement of NII through progressive reduction of extraordinary items (CoCos and LM 2011), business mix and market rates…

CoCos and the "LM 2011" have the biggest impact…

Net interest income

1

…as well as the increase in market rates… …and the rebalancing of the loan book

…followed by the continuous improvement on deposit spread…

Time deposit spread (basis points)

Improvement of commissions through progressive reduction of State guarantees, business mix and initiatives to curb leakage

Commissions/Business Volume in-line with other players in the market through lower leakage and business mix

Commissions (€m)

1

Commissions/Business Volume* (%)

• Progressive reduction of State guarantees
• Pursue the reduction of operational leakage
• Increase cross selling to existing clients
• Increase in the penetration of commission-generating products such as trade finance to SME
• Increase transactional solutions
• Exploit connection with international subsidiaries for the corporate segment

^* Considered average business volume, business volume = Net loans + Deposits from customers Source: Mbcp historical data and Annual reports

Achieve operational efficiency through an additional reduction of the number of branches and employees…

Reduction of operating costs of more than 30% versus pre-programme levels...

2

Cost to income ratio projected for 2017 is lower than historical levels

Operating cost/banking income (%)

...reducing more than 20% of branches and employees

Operating costs have been reduced since 2011 with plans to further reductions in 2013-17

• Domestic retail branch network to further reduce more than 20%
• − From 887 in June 2011 to ~700 in 2017
• More than 20% employee reduction planned
• − From 10,083 in Jun 2011 to ~7,500 in 2017

Operating costs will significantly decrease

• Staff costs cut by more than 30% by 2017 versus average 2008-11

…to compare better with Portuguese peers

Operating costs / Business volume

2

Cost-to-income (%)

• In terms of business volume, the Bank improved to a better than average position and will achieve an additional reduction in operating costs per business volumes
• Mbcp projects to achieve a cost-to-income lower than the peer average

Note: Loans, deposits and business volumes are year end values of the domestic activity; considered net loans and costs includes restructuring expenses Source: Mbcp historical data; Annual Reports

Strong risk management underpinning impairments reduction

3

Cost of risk decreasing but assuming the conservative scenario of keeping above the pre-crisis

23

~

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital
• 1. Summary

Unique international presence focused on key growth markets…

…which represent a growing weight in the Group, allowing fundamental contribution for the increase in consolidated net income

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Poland: the largest international operation, with significant importance for the capital strength and a fundamental piece of "equity story"

Important for the capital strength of Mbcp group	 Poland is the largest Mbcp international operation accounting for a significant share of Mbcp current and expected net income (~36% in 2017)
Important piece of Mbcp "equity story"	 Poland is an important market that presents significant growth prospects  For Mbcp the presence in the Polish market is an important piece to build its future "equity story" (BCP"s holding in Poland represents more than 2/3 of BCP market capitalization)
Mbcp has helped to develop trading relations between Portugal and Poland	 Trading relations between Portugal and Poland have develop strongly since Mbcp"s entrance in the country: Poland is now the 14th – largest Portuguese exporting market (with a growth of 16.3% per the 28th year vs 5.6% for the overall exports during the same period) vs in 1998 Poland is now the 23rd – seller to the Portuguese market (19.2% per year growth vs 4.1% 40th growth in Portuguese imports) vs in 1998
Mbcp model has a strong and recognised business model	 Mbcp's business model has proven to be efficient in the Polish market, succeeding where other greenfield operations failed, and has consistently raised the standards in the Polish market by being extremely innovative. Mbcp has received several international awards in last years including "Best bank for companies" by Forbes, "Best card" by Visa, ranked 2nd in traditional banking and first in internet banking by "Newsweek's Friendly Bank", the most prestigious award in the Polish market, among several others

Poland: Polish market environment provides significant upside

Poland is one of the European countries with the lowest banking penetration...

...and one of the highest growth prospects

Strategic plan 2013-15

Bank Strengths

• Well distributed branch network supported by modern multichannel infrastructure
• Top quality service, highly recognized brand
• High capital base; comfortable liquidity, sound risk management and cost control

Main initiatives

• Exploring new market opportunities in the corporate segment and stronger focus on mid–size companies (growth in corporate loans up to 30-35% of the loans portfolio)
• Increasing consumer lending

Mozambique: unique position, market leader and supporting the ties between PT and MZM

Mozambique: high potential market

Mozambique economy expected to be one of top 12 in the World with higher growth for the next years…

GDP growth (average 2013-17)

Source: IMF

…and is among the least developed banking systems in Africa

Credit as % of GDP

Strategic plan 2013-15

Bank Strengths

• Banking sector market leader with market share over 31% of deposits and 33% of loans to customers
• With 152 branches spread over the territory, Millennium bim has the largest branch network of the banking system
• High profitability

Main initiatives

• Reinforce the competitive positioning in Corporate and Investment Banking to consolidate market leadership
• Create the Prestige segment to support the increasing number of affluent clients

Angola: strong commercial ties to Portugal and where the business model has been proven successful

Presence in a high potential market	 Angola GDP is expected to represent ~60% of Portuguese GDP in 2015 (44% in 2011)
Strong country relationship with Portugal	 Angola shares language, culture and legal system with Portugal Bilateral investment between the two countries is growing, both countries are becoming  major partners  Sizable and important migrant community of Portuguese in Angola (~100K) and Angolans in Portugal (~27K)  Angola is the fourth largest trade partner of Portugal (21% market share of Angola's imports)  Growing number of Portuguese companies seeking Angolan internationalisation is very significant and Mbcp is in a favourable position to become a leading partner of those companies
Mbcp model works well in the Angolan market	Relevant external acknowledgment: "Best Foreign Bank" by EmeaFinance, "Best Bank" by  Euromoney, "Bank of the Year" by The Banker Operational excellence, strict compliance policy and rating contribute to a fresh image of  Angolan financial institutions  Millennium Angola achieved a ROE above 15% after the first 5 years operating  Millennium Angola has the Group"s best revenue indicators per branch
Relationship with key stakeholders	 BCP"s main shareholder is the largest state-owned company of Angola. Sonangol is also a main partner of Millennium Angola, demonstrating that the Government is confident in Millennium abilities  Commitment to the local community with a strategic plan to reach more than 100 branches covering all provinces of Angola and establishment of a training platform for banking employees, together with Banco Privado Atlântico

Angola: high-growth market

Angola economy expected to have higher growth for the next years…

…and is among the least developed banking system in

Africa

Credit as % of GDP

Dec 12 2015 ROE 18.4% > 20% C/I 53.3% < 45% L/D 58.1% < 70% Targets

Bank Strengths

Strategic plan 2013-15

• Branch network covering the whole territory, with a modern and innovative infrastructure
• Highly efficient and compliant operation, with strong brand recognition
• Expansion plan to improve market penetration

Main initiatives

• Improve service quality in affluent segments to increase cross selling and customer acquisition
• Develop a network of specialized branches to supply Clients with specific needs: Corporate centres and Affluent branches

• Reevaluate and reinforce the branch expansion, according to the regional economic development of the provinces

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets

D. Liquidity

• E. Capital
• 1. Summary

Liquidity position: deposits increased and loans to customers reduced...

(Eur billion)

Commercial gap (net loans – deposits)

… with further deleveraging, contributing to the reduction of wholesale and ECB funding needs

(Eur billion)

ECB and wholesale markets

ECB funding	ECB funding was €11.6b in June 2013, being projected to decrease to ~1B€ in 2017
Wholesale markets	Planned debt issue of c.€2.5b/year in 2014-17 below €4.4b/year in 2006-09

• Commercial gap will decrease reaching an LTD of ~107% due to strong effort to :
• increase customer deposits, by partial conversion of capitalisation products to OnBS funds
• stable net loans, in spite of growth in corporate lending
• Lower dependence on ECB and wholesale markets

… and lower refinancing needs for the future, improving significantly the funding structure

Balance sheet structure

CG = Commercial Gap; MM/WSF = Money Market (including ECB) and Wholesale Funding; E = Equity Note: commercial gap is defined as net loans less OnBS customer funds

• Lower short-term refinancing needs than in the past
• Reduction of funding needs, benefitting from the deleveraging process which proceeds at a steady pace
• Deposits are the main source of funding

Funding structure

* Includes repurchase of own debt amounting to €0.5 billion

** Includes repayment of €1.6 billion related to liability management transactions

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity

E. Capital

1. Summary

Capital position: significant improvement on capital ratios

Risk weighted assets

• Reinforcement of core capital in €2 billion through liability management operations (2011 and 2012), rights issues (2011 and 2012) and €3 billion of hybrid instruments (CoCos) in 2012, in spite of Greece and pension funds impacts
• Reduction of RWA by €17 billion through the deleveraging process, IRB methods and deconsolidation in the Greek operation, in spite of rating downgrades
• Significant improvement of core tier 1 from 6.4% to 12.5%

The repayment of CoCos will be achieved through earnings and deleveraging, reaching CT1 higher than the minimum requirements

• BCP intends to repay €3bn of hybrid instruments (CoCos) issued by the State, starting in 2014
• BCP will fulfil all the CT1 requirements: BoP (10%) and CRD IV (7%)
• Post repayment and fully implemented CRD IV, CT1 ratio expected to be at around 10%, well above the 7% requirement

• The achievement will be possible by earnings and reduction of RWA (advanced models optimization and deleveraging)

• 1. DG Comp decision
• 1. Investment highlights
• 1. Portuguese macroeconomic update
• 1. Strategic plan
• A. Main drivers and targets
• B. Portugal: recovery of profitability
• C. International presence focused on strong growth markets
• D. Liquidity
• E. Capital

5. Summary

Summary

 Formal approval of the restructuring plan by the European Commission was achieved  Additional reduction of operating costs to the effective demand for banking services DG Comp  Less demand for banking services and lower market rates decision and  Lower risk exposure that implies fewer RWA, maintaining the same ROE target macro update  International presence with a clear focus on core and without any type of value destruction constraint

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Strategic plan updated (feasible and with lower execution risk)

	Solid Portuguese retail bank	 Prominent position in the financial sector and strong geographic coverage and commercial capacity  Portuguese turnaround (boost operating income, increase operating efficiency and adopt strict limits to risk taking)
Millennium bcp group in the future	Unique international position	 Focused on Poland, Mozambique and Angola with high current and potential growth, self-funded and self-sustained  Value accretion leveraged on existing know-how and capacities, resulting in sustainable long-term growth
	Strong balance sheet and robust business model	 Capital ratios higher than the requirements and reinforcement of liquidity position  Decrease the risk framework in order to delivering sustainable profits in the future

Investor Relations Division Rui Coimbra, Head of Investor Relations

Investor Relations Reporting and Ratings João Godinho Duarte Luís Morais Paula Dantas Henriques Lina Fernandes

Tl: +351 21 1131 084 Tl: + 351 21 1131 337

Email: Investors@millenniumbcp.pt

Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 3,500,000,000

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