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Banco Comercial Portugues

Investor Presentation Feb 1, 2019

1913_iss_2019-02-01_7caa0d13-7c40-42f2-bf9a-c52edae97f86.pdf

Investor Presentation

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2018 Banco BPI Consolidated results

1 February 2019

"Disclaimer"

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

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

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

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

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

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

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

Results in 2018

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Annexes

BPI consolidated results in 2018

Recurring net income increases in Portugal and in the consolidated

Strong growth in deposits and loans in Portugal

High asset quality

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

  • Consolidated net profit of 491 M.€ in 2018
  • Net profit in Portugal of 396 M.€ in 2018
  • Recurring net profit in Portugal of 218 M.€1), increases 28.5% yoy
  • Customer deposits grow 1 792 M.€ (+9.3% yoy)
  • Loans to companies in Portugal increase 1 136 M.€ (+16.1% yoy)
  • Non‐performing exposures ratio ‐ NPE2 (EBA criteria) of 3.5% in Dec.18, improves 1.6 p.p. over Dec.17
  • Coverage by impairments and collateral of non‐performing exposures (NPE) of 127%
  • Fully loaded capital ratios: CET1 of 13.2% and total of 15.0%
  • Fully loaded leverage ratio of 7.0% Strong capitalisation
  • Moody's (16 Oct.) upgraded by 2 notches BPI's long‐term debt rating from Ba1 to Baa2 and the long‐term deposits rating from Baa3 to Baa1
  • Fitch (11 Oct.) upgraded by 1 notch BPI's long‐term debt rating, from BBB‐ to BBB,
  • S&P (9 Oct.) upgraded by 2 notches BPI's standalone rating, from bb‐ to bb+, and reaffirmed the BBB‐ long‐term debt rating.

1) Excluding non recurring gains of 178.0 M.€: gain of 59.6 M.€ with the sale of the stake in Viacer; gain of 61.8 M.€ with the sale of subsidiaries (BPI Gestão de Ativos and BPI GIF), gain of 71.7 M.€ with the sale of acquiring / POS businesses, cost of 15.3 M.€ (after taxes) with early retirements, other non recurring administrative expenses of 2.2 M.€ (after taxes) and net income from discontinued operations of 2.5 M.€. 2) According to EBA (European Banking Authority) criteria; considering the prudential supervision perimeter.

4

Consolidated net profit of 490.6 M.€

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1)Non recurring impacts in the activity in Portugal:

In 2017 – costs of 76.8 M.€ (105.8 before taxes) with early retirements and voluntary terminations, gain of 8.6 M.€ after taxes with the sale of BPI Vida e Pensões and net income from discontinued operations (BPI Vida e Pensões, BPI Gestão de Ativos and BPI GIF) of 22.0 M.€.

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BFA and BCI contribution

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Results in 2018

Annexes

Loans to Customers increase by 5.7% yoy

Loans to companies in Portugal

+ 1 136 M.€

  • Companies in Portugal (+16.1%)
  • Mortgages (+0.8%)
  • Consumer (+4.8%)
  • Total loan portfolio goes up 5.7%
  • Market share (oct.18) 10.1%
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1

1) The evolution of the segment "Other loans to individuals" was influenced by the transfer of the balance related to credit cards (144 M. €) following the sale of the cards business to CaixaBank Payments in the 4th quarter 18.

Corporate and small businesses loan growth

Source: BPI and BdP. 1) Loans to resident non‐financial corporations

92) Source IFAP, refers to market share in total loans contracted from Jan. to Oct. 2018. 3) Considering only the tranches of the Banks; market share in loans contracted from Jan. to Dec. 18.

BPI meetings with corporates

Growth of loans to Individuals, with market share gains

Offering new loan solutions to individuals

Mortgage Loans

Launch of Fixed Rate Mortgage Loans, a solution for Customers looking for security, with a fixed payment until the end of the loan.

Available for 10, 15, 20, 25 or 30 years.

Instant Loan BPI

A 100% online Personal Loan, available to BPI Net and APP Customers, for a financing amount up to 5 000 € for 60 months

10thousand loans

19%of total Personal Loans

Renting

Launch of Renting for Individuals and Companies, with a single‐product offer.

Customer deposits increase 9.3% YoY

Customer resources

Customer deposits increase by 1.8 Bi.€ (+9.3% yoy)

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The Bank has actively being reducing its offer of deposits to institutional investors to optimize liquidity ratios (LCR).

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

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

3) Does not include the effect of securitization operations (BPI calculation).

4) In Nov. 2018. The PPR's include PPR in the form of mutual funds and capitalization insurance. For this reason, these PPRs are excluded in the calculation of the mutual funds and Capitalization Insurance market shares.

Improving Customer Experience

Progress in digital transformation with benefits for Customers, increase in commercial capacity and improvement of commercial efficiency

1) Active customers 1st holders, individuals and companies.

2) Individuals BASEF (Dec.18 accumulated), Empresas DATAE (2018).

Public recognition

BPI was elected, for the first time, "The Best Bank in Portugal" in the awards for excellence of Euromoney magazine

Public recognition

Social Responsibility: 15.16 M. € of support granted in 2018

Joint intervention BPI and "la Caixa" Foundation

15.16 M.€

Breakdown of the Social Responsibility budget in 2018

Social solidarity awards

Results in 2018

Annexes

Net interest income increases 8.8% (yoy)

Commissions grow 5.6% yoy

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

Recurring Gross income increases 9.0% yoy

Recurring Gross income

+9.0% yoy

driven by growth in net interest income and commissions

Gross income as reported

+18.0% yoy

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Recurring Operating expenses decrease 0.1% yoy

1) Additionally, at Dec.18, BPI had 39 premier centres, 1 mobile branch and 34 corporate centres in Portugal, thus totalling 495 business units.

8 M.€ in 2018

37 M.€

Loan impairment reversals of 8 M.€ and recoveries of 37 M.€ in 2018

254 264 17210333 25‐8 ‐13 ‐15 ‐14 ‐16 ‐14 ‐30 ‐370.96% 1.04% 0.72%0.45%0.15% 0.11%‐0.04%2012 2013 2014 2015 2016 2017 2018 Recoveries of loans previously written off Impairments YoY evolution of cost of credit risk, M.€ Impairments as a % of the loan portfolio1) Cost of credit risk 1) 2012 2013 2014 2015 2016 2017 2018 242 249 158 87 19 (5) (45) 0.91% 0.98% 0.66% 0.38% 0.09% (0.02%) (0.20%) % loan portfolio Impairment reversals of Loan recoveries previously written off amounted to The application of IFRS 9 led to an increase of 35 M.€ in loan impairments, which was directly recognized in shareholders' equity, and an impact in shareholders' equity of ‐26 M.€.

1) Impairments after deducting recoveries of loans previously written off.

NPE ratio of 3.5% in December 2018

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

2) NPE ratio considering the prudential supervision perimeter.

Solid capital position

Consolidated ratios

1)Minimum value in calibration.

Balanced funding structure and comfortable liquidity position

Customer resources constitute the main source of financing of the balance sheet (71% of the assets)

1)Includes short‐term public debt of 0.5 Bi.€ (Portugal), with a residual average maturity of 0.5 years, and medium and long‐term debt of 2.6 Bi.€ (Portugal 34%, Spain 40% and Italy 27%) with an average residual maturity of 2.0 years.

2)Average amount (last 12 months) of LCR components calculation: Liquidity Reserves (3 930 M.€); Total net outflows (2 348 M.€).

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

nd
… A
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and
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ra

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  • Moody's (16 Oct.) upgraded by 2 notches BPI's long‐term debt rating from Ba1 to Baa2 and the rating of long‐term deposits from Baa3 to Baa1. The outlook of the long‐term debt rating is negative and the outlook of deposits is stable.
  • Fitch(11 Oct.) upgraded by 1 notch BPI's long‐term debt rating, from BBB‐ to BBB, with stable Outlook
  • S&P(9 Oct.) upgraded by 2 notches BPI's standalone rating, from bb‐ to bb+, and reaffirmed the BBB‐ long‐term debt rating, with a positive Outlook

Results in 2018

Annexes

BPI Strategic lines for 2019‐21: Overview

  • Selective lending growth: consumer, mortgages, corporate
  • Promote customer savings diversification
  • Focus on Customer payroll deposits
  • Reinforce insurance products distribution
  • Strengthen profitability analytics per operation
  • IRBadoption
  • Simplify product offering, services and pricing
  • Maintain a stable cost base

Accelerate transformation of CUSTOMER EXPERIENCE

  • Process‐review focusing on Customer experience
  • Leverage advanced analytics to better know and understand customer needs
  • Develop ecosystem potential (Life Journeys, CABK technology)
  • Provide adequate sales tools
  • Increase percentage of digital customers 1)

Develop the bank's HUMAN RESOURCES3 4 5

  • Enhance training and development at all levels
  • Foster talent management
  • Promote agile culture that fosters motivation and involvement
  • Promote cultural integration in
  • Caixabank Group
  • digitalisation to

Improve operational and organisational EFFICIENCY

  • Continuously review our distribution networks
  • Simplify our processes
  • Centralise non commercial processes
  • Differentiate service levels based on customer potential value

improve efficiency

Extensive use of

Consolidate reputation based on QUALITY OF SERVICE

  • Maintain a high quality of service to customers
  • Position BPI as a benchmark in responsible management and social commitment

1) Percentage calculated with no age restrictions.

BPI Strategic lines: Business targets for 2019 E‐2021E

To grow the loan book above the market Keep advancing in digital channels and expertise in long‐term savings products

1) Percentage calculated with no age restrictions. | 2) For individuals and companies, overall, internet banking and digital channel satisfaction indexes from independent market research companies. 3) Excluding real estate, money market investment funds and products with guaranteed capital. Includes public offerings.

BPI Strategic lines: financial targets for 2019 E‐2021E

Net income improvement underpinned by revenue growth, stable expenses and low CoR

1) NII, dividends, fees, equity accounted income (Allianz, Unicre and Cosec) and services paid by the businesses sold to CaixaBank. 2) Recurrent operating expenses as % of core revenues.

Results in 2018

Annexes

Results in 2018 ‐ Highlights

Results in 2018

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

Discontinued operations in accordance with IFRS 5

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

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

Adoption of a new structure of the financial statements

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

Reclassification of costs from Other administrative expenses to Commissions paid

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

Profit and loss account for 2017 restated

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

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Non recurring impacts:

In 2017 – costs of 76.8 M.€ (105.8 before taxes) with early retirements and voluntary terminations, gain of 8.6 M.€ after taxes with the sale of BPI Vida e Pensões (recorded in the caption "Net income from discontinued operations") and net income from discontinued operations (BPI Vida e Pensões, BPI Gestão de Ativos and BPI GIF) of 22.0 M.€.

In 2018 – gain of 59.6 M.€ with the sale of the stake in Viacer, gain of 61.8 M.€ with the sale of subsidiaries (BPI Gestão de Ativos and BPI GIF), gain of 71.7 M.€ with the sale of acquiring / POS businesses, cost of 15.3 M.€ (after taxes) with early retirements, other non recurring administrative expenses of 2.2 M.€ (after taxes) and net income from discontinued operations of 2.5 M.€.

Note: The 2017 income statement restated reflects the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF to the consolidated results in accordance with IFRS 5, the adoption of a new income statement structure following the entry into force of IFRS 9, and the reclassification of some costs from Other administrative expenses to Commissions paid.

Consolidated income statement

In M
.€
1)
201
7 re
ted
sta
201
8
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int
inc
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e
3
8
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1
4
2
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de
d
D
iv
i
inc
n
om
e
6.
5
1.
7
d
Eq
ity
inc
te
u
ac
co
un
om
e
1
2
4.
8
2
7
1.
6
fee
d c
Ne
iss
ion
inc
t
an
om
m
om
e
2
6
4.
0
2
7
7.
8
/
(
los
)
f
l a
d
l
b
l
d o
he
Ga
ins
ina
ia
ia
i
it
ies
ts
t
ses
on
nc
sse
an
an
r
1
4.
4
7
6.
9
he
d e
Ot
ing
inc
t
r o
p
era
om
e a
n
xp
en
ses
(
)
2
4.
3
(
)
1
2.
9
inc
Gr
os
s
om
e
7
7
3.
5
1
0
3
7.
6
f
f e
Sta
xp
en
ses
(
)
3
6
9.
7
(
)
2
6
2.
2
O
f w
h
ic
h:
ing
f
f e
Re
st
cu
rr
a
xp
en
ses
(
)
2
6
3.
9
(
)
2
4
1.
1
2)
ing
No
sts
n‐r
ec
ur
r
co
(
)
0
8
1
5.
(
)
2
1.
1
he
Ot
dm
in
ist
ive
rat
r a
ex
p
en
ses
(
)
1
5
0.
9
(
)
1
7
2.
9
d a
De
iat
ion
isa
ion
rt
t
p
rec
an
mo
(
)
2
1.
9
(
)
2
3.
8
Op
ing
t
era
ex
p
en
se
s
(
)
5
4
2.
5
(
)
4
5
8.
9
Ne
ing
inc
t o
t
p
era
om
e
2
3
1.
0
5
7
8.
6
los
d o
he
Im
irm
is
ion
t
t
p
a
en
ses
an
r p
rov
s
(
)
0.
1
4
7.
9
d
los
he
Ga
ins
in
ot
ts
an
ses
r a
sse
1
2.
2
(
)
6
8.
7
inc
be
for
inc
Ne
t
e t
om
e
e
om
ax
2
4
3.
0
5
5
7.
9
Inc
e t
om
ax
(
)
5
1.
8
(
)
1
3
1.
4
inc
fro
inu
ing
ion
Ne
t
nt
at
om
e
m
co
op
er
s
9
3
1
1.
2
6.
4
4
fro
inc
d
isc
inu
d o
ion
Ne
t
t
t
om
e
m
on
e
p
era
s
(
)
1
8
1.
0
6
2
4.
Inc
i
bu
b
le t
l
l
ing
int
ttr
ta
ntr
sts
om
e a
o n
on
‐co
o
ere
(
)
0.
0
Ne
inc
t
om
e
1
0.
2
4
9
0.
6

EARNINGS PER SHARE

1)
ted
201
7 re
sta
201
8
ing
ha
(
)
Ea

rn
s p
er
s
re
0.
0
1
0.
3
4
fro
(
)
Ne
inc
inu
ing
ion

t
nt
t
om
e
m
co
op
era
s
0.
1
3
0.
2
9
(
)
inc
fro
d
isc
inu
d o
ion

Ne
t
t
t
om
e
m
on
e
p
era
s
0.
2
1
0.
0
4
hte
d n
f s
ha
(
l
l
)
Av
ig
in
i
ion
era
g
e w
e
r. o
res
m
s
1
4
5
6
1
4
5
7

The 2017 income statement restated reflects the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF to the consolidated results in accordance with IFRS 5, the adoption of a new income statement structure following the entry into force of IFRS 9, and the reclassification of some costs from Other administrative expenses to Commissions paid. 1)Costs with voluntary terminations and early retirements.

Consolidated balance sheet

In
M.
3
1
De
1
7
c.
3
1
De
1
8
c.
A
S
S
E
T
S
h
he
fo
f
W
i
in
I
F
R
S
9,
t
t
try
to
e
n
rce
o
h a
d c
h
ba
lan
l
ba
ks
d o
he
de
d
de
Ca
its
t c
tra
t
s
n
as
ce
s a
en
n
an
r
ma
n
p
os
1
0
9
4.
1
2
4
5
2.
9
l a
he
l
fo
fa
lue
hro
h p
f
los
fa
F
ina
ia
d
d
ing
ir v
it o
d a
ir
ts
r tr
at
t
t
nc
sse
a
a
ug
ro
r
s a
n
,
4
1
7
5.
9
2
3
3
0.
5
de
de
d
do
Ba
B
P
I
i
to
t a
tru
tu
nc
o
c
a
p
s
c
re
lue
hro
h o
he
he
ive
inc
t
t
va
ug
r c
om
p
re
ns
om
e
f
he
d
du
l a
d c
l
da
d
in
iv
i
i
t
te
o
a
n
on
so
l a
d c
F
ina
ia
ise
ts
at
ort
t
nc
sse
am
os
2
2
5
0
6.
7
2
5
6
7
1.
9
f w
h
h:
O
ic
f
ina
ia
l s
in
l
ine
i
h
he
ta
te
ts
t
t
nc
me
n
w
Lo
Cu
s t
sto
an
o
me
rs
2
1
6
3
8.
2
2
2
9
4
9.
1
/
de
l
f
la
(
)
i
ine
Re
ion
E
U
2
0
1
7
1
4
4
3
t
g
u
s o
g
u
d a
Inv
in
j
int
iat
tm
ts
ntu
es
en
o
ve
res
an
sso
c
es
7
9
4.
5
2
0
9.
1
b
le
Ta
i
ets
ng
ass
4
5.
3
6
7.
3
f
d w
i
h
he
Ju
2
9,
2
0
1
7 a
t
t
tru
tu
o
ne
n
s
c
re
Int
i
b
le
ets
an
g
ass
4
2.
3
1
5
5.
f
he
f
l s
d
by
ina
ia
t
ta
te
ts
te
o
nc
me
n
p
re
se
n
Ta
ts
x a
sse
4
5
3.
2
3
5
2.
8
k
(
he
l
f
Ca
ixa
i
da
i
Ba
t
t
t
d
d
isp
l g
las
i
f
ie
d a
he
l
d
fo
le
No
t a
ts
n‐c
ur
ren
sse
an
os
a
rou
p
s c
s
s
r s
a
7
3.
3
3
3.
9
ing
ty
n
co
ns
o
e
n
o
he
Ot
ts
r a
sse
4
4.
9
5
3
9
4.
5
).
Ba
B
P
I
nc
o
l a
To
ta
ts
sse
2
9
6
4
0.
2
3
1
5
6
8.
0
S
L
I
A
B
I
L
I
T
I
E
l
l
b
l
he
l
d
fo
d
F
ina
ia
ia
i
it
ies
ing
r tr
nc
a
1
7
0.
0
1
4
1.
3
l
l
b
l
d c
F
ina
ia
ia
i
it
ies
ise
at
ort
t
nc
am
os
2
5
9
6
1.
4
2
7
5
1
5.
7
its
Ce
l
ks
d
Cre
d
it
itu
ion
De
Ba
Ins
ntr
t
t
p
os
a
n
an
s
3
9
8.
0
7
3
2
0
6.
3
De
its
Cu
sto
p
os
me
rs
2
0
7
1
3.
6
2
2
9
6
0.
3
hn
ica
l p
is
ion
Te
c
rov
s
bt
De
it
ies
iss
d
se
cu
r
ue
1
0
2
0.
0
1
1
1
8.
2
du
bo
d
d
l
b
l
Me
ite
ina
ia
i
it
ies
te
mo
ran
m
ms
: su
r
3
0
5.
1
3
0
4.
5
he
f
ina
ia
l
l
ia
b
i
l
it
ies
Ot
r
nc
2
4
9.
8
2
3
1.
0
Pro
is
ion
v
s
6
4.
2
6
5.
5
l
b
l
Ta
ia
i
it
ies
x
7
0.
6
7
3.
8
ia
b
i
l
it
ies
inc
lu
de
d
in
d
isp
l g
las
i
f
ie
d a
he
l
d
fo
le
L
os
a
rou
p
s c
s
s
r s
a
4.
5
0.
0
he
l
b
l
Ot
ia
i
it
ies
r
5
4
5.
8
5
6
5.
7
l
b
l
To
L
ia
i
it
ies
ta
2
6
8
1
6.
6
2
8
3
6
2.
1
f
S
ha
ho
l
de
' e
ity
i
bu
b
le
he
ha
ho
l
de
B
P
I
at
tr
ta
to
t
re
rs
q
u
s
re
rs
o
2
8
2
3.
6
3
2
0
6.
0
l
l
No
ing
int
tro
ts
n c
on
er
es
0.
0
0.
0
l
ha
ho
l
de
' e
ity
To
S
ta
re
rs
q
u
2
8
2
3.
6
3
2
0
6.
0
l
l
b
l
d
ha
ho
l
de
' e
To
ia
i
it
ies
S
ity
ta
an
re
rs
q
u
2
9
6
4
0.
2
3
1
5
6
8.
0

Consolidated profitability and efficiency metrics

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

2
0
1
7
d
ta
te
1)
re
s
2
0
1
8
/
Gr
inc
d
i
d
inc
A
T
A
ty
te
os
s
om
e a
n
eq
u
ac
co
un
om
e
2.
3
%
3.
%
4
/
be
fo
d
bu
b
le
l
l
Ne
inc
inc
inc
i
ing
in
A
T
A
t
ta
t
tr
ta
to
tro
te
ts
om
e
re
om
e
x a
n
om
e a
n
on
‐c
on
re
s
0.
2
%
2.
0
%
/
inc
be
fo
inc
d
inc
i
bu
b
le
l
l
ing
in
ha
ho
l
de
'
Ne
t
ta
t
tr
ta
to
tro
te
ts
om
e
re
om
e
x a
n
om
e a
n
on
‐c
on
re
s
av
er
ag
e s
re
rs
(
lu
d
l
l
)
i
inc
ing
ing
in
ty
tro
te
ts
eq
n
on
‐c
on
re
s
u
2.
%
4
2
0.
3
%
/
f
f e
d e
d
S
Gr
inc
i
inc
2
ta
ty
te
xp
en
se
s
os
s
om
e a
n
q
u
ac
co
un
om
e
3
4.
1
%
2
3.
2
%
/
ing
inc
d e
i
d
inc
Op
Gr
2
t
ty
te
er
a
ex
p
en
se
s
os
s
om
e a
n
q
u
ac
co
un
om
e
%
5
6.
5
%
4
1.
9
(
)
de
Lo
i
io
t
to
ts
t
an
s
ne
p
os
ra
1
0
%
5
1
0
4
%

1) Considering the "restated" financial statements of 2017 which reflect the restatement of the contribution of BPI Vida e Pensões, BPI Gestão de Activos and BPI GIF for the consolidated net income in conformity with IFRS 5 rules, and the adoption of a new format for the Income Statement, following the entry into force of IFRS9, and the reclassification of certain "Other administrative expenses" to Comissions paid.

2) Excluding early‐retirement costs.

NPE ratio and forborne (prudential perimeter; according to the EBA criteria)

De
1
7
c.
De
1
8
c.
fo
(
)
No
ing
N
P
E
io
t
n‐
p
er
rm
ex
p
os
ur
es
ra
5.
1
%
3.
5
%
by
d c
l
la
ls
N
P
E c
im
irm
ts
te
ov
er
p
a
en
an
o
ra
1
1
7
%
1
2
7
%
1)
f
fo
bo
lu
de
d
io
inc
in
N
Ra
P
E
t
t
o
r
rn
e n
o
1.
9
%
0.
8
%

1) Forborne according to EBA criteria and considering the scope of prudential supervision. On 31 December 2018, the forborne was 813 M. € (forborne ratio of 2.5%), of which 254 M.€ was performing loans (0.8% of the gross credit exposure) and 559 M.€ was included in NPE (1.7% of the gross credit exposure).

Alternative Performance Measures – reconciliation of the income statement

Consolidated income statement

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

ed
in t
he
sul
ts'
ion
Str
Re
Pre
uct
tat
ure
us
sen
20
18
20
18
ted
in
the
fin
ial
nd
tiv
Ne
tru
ctu
sta
tem
ent
ote
w s
re
pre
sen
anc
s a
res
pec
e n
s
Ne
t in
in
ter
est
com
e
42
2.6
42
2.6
Ne
t in
in
ter
est
com
e
ide
nd
Div
inc
om
e
1.7 1.7 ide
nd
Div
inc
om
e
Equ
ity
d in
nte
acc
ou
com
e
27
1.6
27
1.6
/
(
s) o
Sha
f p
rof
it
los
f e
nti
tie
ed
for
ing
th
ity
tho
d
unt
re o
s a
cco
us
e e
qu
me
t fe
nd
Ne
mis
sio
n in
e a
com
com
e
27
7.8
31
9.0
d c
Fee
mis
sio
n in
an
om
com
e
(
.2)
41
Fee
d c
mis
sio
an
om
n e
xpe
nse
s
/
(
los
) o
n f
al a
nd
liab
ilit
d
Ga
ins
ina
nci
ies
ts a
ses
sse
an
76
.9
1.5 /
(
los
) o
n d
of
fin
ial
d li
abi
litie
red
fa
alu
hro
h p
rof
r lo
Ga
ins
nit
ion
ir v
it o
ets
ot
at
e t
net
ses
ere
cog
anc
ass
an
s n
me
asu
ug
ss,
oth
er
39
.0
/
(
) o
Ga
ins
los
n f
ina
nci
al a
nd
liab
ilit
ies
he
ld f
din
ts a
tra
et
ses
sse
or
g, n
60
.3
/
(
los
) o
n f
al a
de
ed
for
din
lso
rily
d a
t fa
alu
hro
h p
rof
r lo
Ga
ins
ina
nci
sig
ir v
it o
ts
not
nat
tra
e t
net
ses
sse
g c
om
pu
m
eas
ure
ug
ss,
1.4 /
(
)
Ga
ins
los
fro
hed
nti
t
ses
m
ge
acc
ou
ng,
ne
(
.3)
25
/
han
diff
s (g
los
s),
Exc
ain
net
ge
ere
nce
Oth
tin
inc
nd
er
op
era
g
om
e a
exp
ens
es
(
.9)
12
11
.5
Oth
tin
inc
er
op
era
g
om
e
(
.4)
24
Oth
tin
er
op
era
g e
xpe
nse
s
Gro
inc
ss
om
e
1 0
37
.6
103
7.6
GR
OS
S I
NC
OM
E
ff e
Sta
xpe
nse
s
(
)
26
2.2
(
)
26
2.2
ff e
Sta
xpe
nse
s
Oth
adm
inis
tiv
tra
er
e e
xpe
nse
s
(
.9)
172
(
.9)
172
Oth
adm
inis
tiv
tra
er
e e
xpe
nse
s
nd
De
cia
tio
isa
tio
ort
pre
n a
am
n
(
.8)
23
(
.8)
23
nd
De
cia
tio
isa
tio
ort
pre
n a
am
n
Op
tin
era
g e
xpe
nse
s
(
)
45
8.9
(
)
45
8.9
Ad
mi
nis
tiv
de
cia
tio
nd
isa
tio
tra
ort
e e
xpe
nse
s,
pre
n a
am
n
Ne
ing
in
t o
rat
pe
com
e
57
8.6
57
8.6
NE
T O
PER
AT
ING
IN
CO
ME
irm
lo
nd
oth
vis
ion
Im
ent
pa
sse
s a
er
pro
s
.9
47
(
)
1.1
vis
ion
sal
of
ovi
sio
Pro
s o
r re
ver
pr
ns
49
.0
/
(re
sal
) o
f im
lo
n f
al a
d a
t fa
alu
hro
h p
rof
r lo
Im
irm
irm
ina
nci
ir v
it o
ent
ent
ts
not
e t
pa
ver
pa
sse
s o
sse
m
eas
ure
ug
ss
Ga
ins
d lo
s in
her
ot
set
an
sse
as
s
(
.7)
68
(
)
6.7
(‐
) re
Im
irm
sal
of
im
irm
titi
d f
usi
the
uit
eth
od
ent
ent
nte
pa
or
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The European Securities and Markets Authority (ESMA) published on 5 October 2015 a set of guidelines relating to the disclosure of Alternative Performance Measures by entities (ESMA / 2015 / 1415). These guidelines are to be obligatorily applied with effect from 3 July 2016. In addition to the financial information prepared in accordance with the International Financial Reporting Standards (IFRS), BPI uses a set of indicators for the analysis of performance and financial position, which are classified as Alternative Performance Measures, in accordance with the abovementioned ESMA guidelines. The information relating to those indicators has already been the object of disclosure, as required by the ESMA guidelines. In the current presentation, the information previously disclosed is inserted by way of cross‐reference. A summarized list of the Alternative Performance Measures is presented next.

41

Alternative Performance Measures

EARNINGS, EFFICIENCY AND PROFITABILITY INDICATORS

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

Gross income = net interest income + Dividend income + Net fee and commission income + Equity accounted income + Gains/(losses on financial assets and liabilities and other + Other operating income and expenses

Commercial banking gross income = net interest income + Dividend income + Net fee and commission income + Equity accounted income excluding the contribution of stakes in African banks

Operating expenses = Staff expenses + Other administrative expenses + Depreciation and amortisation

Adjusted Operating expenses = Staff expenses excluding cost with early retirements and voluntary terminations and (only in 2016) gains with the revision of the Collective Labour Agreement (ACT) + Other administrative expenses (recurring) + Depreciation and amortisation

Net operating income = Gross income ‐ Operating expenses

Net income before income tax = Net operating income + Impairment losses and other provisions + Gains and losses in other assets

Cost‐to‐income ratio (efficiency ratio) 1) = Operating expenses / Gross income

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

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

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

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

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

BALANCE SHEET AND FUNDING INDICATORS

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

  • Deposits = Sight and other deposits + Term and savings deposits + Accrued interest + Retail bonds (Fixed / variable rate bonds and structured products placed with Customers + Deposits certificates + Subordinated bonds placed with Customers)
  • Capitalisation insurance of fully consolidated subsidiaries (BPI Vida e Pensões sold on Dec.17) = Unit links capitalisation insurance and "Aforro" capitalisation insurance and others (Technical provisions + Guaranteed rate and guaranteed retirement capitalisation insurance)

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

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

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

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

Alternative Performance Measures

BALANCE SHEET AND FUNDING INDICATORS (continuation)

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

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

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

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

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

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

ASSET QUALITY INDICATORS

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

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

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

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

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

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

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

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

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

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

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

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

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

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