Quarterly Report • Oct 13, 2014
Quarterly Report
Open in ViewerOpens in native device viewer
This is a mere translation of the original Portuguese documents prepared by Banco Popular Portugal, S.A., which was made with the single purpose of simplifying their consultation to English speaking stakeholders. In case of any doubt or contradiction between these and the original documents, their Portuguese version prevails.
| Page | |
|---|---|
| General Information4 | |
| Board and Management 5 |
|
| Banco Popular Portugal Financial Highlights 6 |
|
| Interim Management Report 7 |
|
| Macroeconomic scenario8 | |
| Commercial strategy 9 |
|
| Income and profitability10 | |
| Net interest income 10 |
|
| Banking income 12 |
|
| Operating income13 | |
| Net income15 | |
| Loans and deposits 15 |
|
| Total assets15 | |
| Customer funds16 | |
| Loans and advances to customers18 | |
| Main Risks and Uncertainties 19 |
|
| Qualifying holdings21 | |
| Declaration of compliance of the financial information 22 |
|
| Half-Year Accounts23 | |
| Balance sheet 23 |
|
| Income Statement24 | |
| Statement of Comprehensive Income 25 |
|
| Individual Statement of Changes in Equity 25 |
|
| Cash FlowStatement26 | |
| Notes to the Financial Statements27 |
Banco Popular Portugal, S.A., was founded on 2 July 1991. The head office is located at 51 Ramalho Ortigão in Lisbon. It is registered at the Lisbon Commercial Registry under the taxpayer No. 502.607.084. The Bank adopted its current corporate name in September 2005 to the detriment of its former name 'BNC-Banco Nacional de Crédito, S.A.' Banco Popular Portugal is a member of the Deposit Guarantee Fund and it has a share capital of 476 million euros.
The financial and statistical data provided herein were prepared according to analytical criteria based on the utmost objectivity, detail, reporting transparency and consistency over time, from the financial information periodically sent to the Bank of Portugal. The financial statements are presented in accordance with the legislation in force in 2014, particularly those issued by the Bank of Portugal regarding the presentation of accounting information.
Pursuant to article 8(3) of the Portuguese Securities Market Code, the half-year information contained herein was not submitted to any auditing or limited reviewing.
The interim management report, the half-year accounts and its accompanying documents are available at Banco Popular Portugal's Internet website: www.bancopopular.pt.
Augusto Fernando Correia Aguiar-Branco - Chairman João Carlos de Albuquerque de Moura Navega - Secretary
Rui Manuel Morganho Semedo - Chairman Carlos Manuel Sobral Cid da Costa Álvares - Member Tomás Pereira Pena - Member José Ramón Alonso Lobo - Member
Rui Manuel Ferreira de Oliveira - Chairman Telmo Francisco Salvador Vieira António José Marques Centúrio Monzelo Ana Cristina Freitas Rebelo Gouveia – Alternate
PricewaterhouseCoopers & Associados, Sociedade de Revisores Oficiais de Contas, Lda., represented by Aurélio Adriano Rangel Amado or by José Manuel Henriques Bernardo
Jorge Manuel Santos Costa, Statutory Auditor
(million euros, unless otherwise stated)
| Var. | |||
|---|---|---|---|
| Jun-14 | (% and | jun-13 | |
| p.p.) | |||
| Turnover | |||
| Total assets managed | 10 318 | 0.1% | 10 311 |
| On-balance sheet total assets | 9 333 | -2.6% | 9 581 |
| Own funds (a) | 712 | 4.8% | 680 |
| Customer funds: | 4 980 | 1.2% | 4 919 |
| on balance sheet | 3 995 | -4.6% | 4 190 |
| other intermediated customer funds | 985 | 35.0% | 730 |
| Loans and advances to customers | 5 649 | -4.3% | 5 905 |
| Contingent risks | 569 | -6.0% | 605 |
| Solvency | |||
| Solvency ratio-BP | 11.3% | 0.2 | 11.1% |
| Tier 1 | 11.3% | 0.2 | 11.1% |
| Core Tier 1 | 11.6% | 0.2 | 11.4% |
| Risk Management | |||
| Total risks | 6 218 | -4.5% | 6 510 |
| Non-performing loans | 309 | 23.0% | 251 |
| Non-performing loans for more than 90 days | 285 | 25.7% | 227 |
| Non-performing loan ratio (%) | 5.5% | 1.2 | 4.2% |
| Non-performing hedging ratio | 111.9% | 7.7 | 104.2% |
| Earnings | |||
| Net interest income | 62.1 | -3.3% | 64.2 |
| Banking income | 92.3 | 1.6% | 90.9 |
| Operating income | 34.4 | -2.7% | 35.4 |
| Net income before tax | 1.3 | -61.7% | 3.3 |
| Net income | 1.2 | -41.3% | 2.0 |
| Profitability and efficiency | |||
| Average net assets | 9 619 | 4.7% | 9 186 |
| Average own assets | 696 | 3.9% | 670 |
| ROA (%) | 0.03% | -0.02 | 0.04% |
| ROE (%) | 0.35% | -0.27 | 0.62% |
| Cost to income (%) | 60.5% | 2.19 | 58.3% |
| Per share data | |||
| Final number of shares (millions) | 476 | 0.0% | 476 |
| Average number of shares (millions) | 476 | 0.0% | 476 |
| Share book value (€) | 1.497 | 4.8% | 1.428 |
| Earnings per share (€) | 0.003 | -41.3% | 0.004 |
| Other data | |||
| Number of employees | 1 295 | -0.8% | 1 305 |
| Number of branches | 172 | -2.8% | 177 |
| Employees per branch | 7.5 | 2.1% | 7.4 |
(a) After appropriation of results for each year
As at June 2014, Banco Popular Portugal, S.A., reported shareholder's equity of 712,434 thousand euros, a network of 172 branches and a team of 1,295 staff. The Bank had over 400 thousand customers and managed around 10.3 billion euros of total assets, including customer funds in the amount of 5 billion euros. At the end of the first half of 2014, the Bank's total net assets amounted to 9.3 billion euros.
The Bank operates in Portugal offering a full range of products: Deposits, Retail Credit, Corporate Credit, Life and Non-life Insurance, Asset Management and Factoring. The Bank's activities are supported by the following companies:
Popular Gestão de Ativos, SA – fully owned by Banco Popular Español S.A. (BPE) is a Fund Management Company that manages, among others, the securities commercialized by the Bank;
Popular Factoring, S.A., 99.8% held by BPE, is a credit institution that provides Factoring services;
Eurovida - Companhia de Seguros de Vida, S.A., is an insurance company that provides life and capitalisation insurance, and is 84.1% held by BPE and 15.9% held by the Bank;
Popular Seguros - Companhia de Seguros, S.A., is wholly owned by Eurovida, and trades in non-life insurance products.
In the second quarter of 2014, according to the first data available, Gross Domestic Product increased by 0.8 % when compared with the same period last year, with a quarterly change of 0.6%, thus recovering from the drop in the first quarter (-0.6 % quarter-on-quarter). This performance of the national economy, which will have been lower than in the first quarter (1.3 %) when compared with the same period last year, was constrained by the decrease in Exports of Goods and Services and by the evolution of Investment which is at the base of the smaller contribution of domestic demand to GDP. Projections for the 2014-2016 period point towards a gradual recovery of the economic activity. However, there are still some uncertainties for 2014 regarding the 1.1% real GDP growth projection arising from the growth capacity of exports, the continuous recovery of private consumption, the recovery of the financial system and the external framework, namely in the Euro area.
Domestic demand maintained the recovery trend initiated in the 2nd quarter of 2013, driven by investment and private consumption, although in this past quarter there have been some signs of downturn, for example the deceleration of the Retail Trade Turnover Index, which went down from a change by 1.8% in May to 0.1% in June when compared with the same period last year. The Consumer Confidence Indicator increased in June, continuing the strong upward trend that started at the beginning of 2013, peaking since 2007. In the past few months, this indicator has benefited from the positive performance of every component, mostly due to the outlook on the evolution of unemployment.
According to the National Institute for Statistics (INE), the unemployment rate in Portugal stood at 13.9% at the end of the 2nd quarter. The unemployment rate has been moderately and uninterruptedly decreasing this year. However, it is the 5th highest unemployment rate in Europe.
In June 2014, the Harmonised Consumer Price Index recorded a -0.2% year-on-year rate of change, reflecting the lower slowdown of the price of goods and a deceleration of the prices of services.
The European Central Bank lowered its reference interest rate in June to a new low of 0.15%. According to the Council of the European Central Bank, the economy in the Euro area shall recover moderately in this context of low inflation and weakness of the monetary and credit conditions.
During the first half-year, Banco Popular has continued its strategy of being a leading Bank for Companies while still providing a universal offer with a customer-centred approach and prepared for their everyday needs. On the other hand, the Bank has maintained its focus on providing customer services with a view to accompanying their life-cycle and with a better interaction between channels to create a relationship and generate business opportunities.
Proving the dynamics of its commercial activity, Banco Popular has managed to attract 15 thousand new customers,of which 11,213 are private individuals and 3,749 are companies. In both segments, it was evident the effort of increasing the transactionality and loyalty.
Corporate lending, namely by supporting internationalisation and offering a wide range of products and services were two major priorities for this segment during the first half of the year. We would like to highlight the Bank's dynamism in terms of credit placement through Linhas PME Crescimento targeted at SMEs and the increased market share in terms of Leasing.
The communication strategy has accompanied and reflected the strategic positioning of the Bank, which was made clear in a multimedia communication campaign launched in the first half of the year.
The statement of income is summarised in table 1, based on the first half of 2014 and the corresponding period of 2013 pursuant to regulations issued by the Bank of Portugal.
| Table 1 . Individual Income Statement | |||||
|---|---|---|---|---|---|
| (€ thousand) | |||||
| jun-14 | jun-13 | Change Amount |
% | ||
| 1 | Interest and similar income | 133 481 | 161 149 | - 27 668 | -17.2 |
| 2 | Interest and similar charges | 71 407 | 96 986 | - 25 579 | -26.4 |
| 3 | Net interest income (1-2) | 62 074 | 64 163 | - 2 089 | -3.3 |
| 4 | Return on equity instruments | 58 | 47 | 11 | 23.3 |
| 5 | Net fees and commissions | 29 819 | 24 698 | 5 121 | 20.7 |
| 6 | Income from financial transactions (net) | 8 765 | 2 506 | 6 259 | 249.8 |
| 7 | Income from the sale of other assets | - 5 181 | 2 614 | - 7 795 | -298.2 |
| 8 | Other operating income | - 3 214 | - 3 138 | - 76 | -2.4 |
| 9 | Banking income (3+4+5+6+7+8) | 92 320 | 90 890 | 1 431 | 1.6 |
| 1 0 |
Personnel expenses | 28 585 | 27 913 | 672 | 2.4 |
| 1 1 |
General administrative expenses | 27 293 | 25 112 | 2 181 | 8.7 |
| 1 2 |
Depreciation | 2 003 | 2 483 | - 480 | -19.3 |
| 1 3 |
Operating income(9-10-11-12) | 34 440 | 35 382 | - 942 | -2.7 |
| 1 4 |
Provisions net of reversals and recoveries | 337 | - 2 129 | 2 466 | 115.8 |
| 1 5 |
Value adjustments net of loans and advances to customers | 35 866 | 32 184 | 3 682 | 11.4 |
| 1 6 |
Impairment and other net provisions | - 3 040 | 1 993 | - 5 033 | -252.5 |
| 1 7 |
Profit before tax (13-14-15-16) | 1 277 | 3 334 | - 2 057 | -61.7 |
| 1 8 |
Income tax | 74 | 1 285 | - 1 210 | -94.2 |
| 1 9 |
Net income for the period (17-18) | 1 202 | 2 049 | - 847 | -41.3 |
At the end of the first half of 2014, net interest income amounted to 62 million euros, reflecting a decrease by approximately 2.1 million euros, i.e., 3.3% less when compared with the same period of 2013. This decrease was due, as can be seen in table 2 on the Assets side, to the combined effect of credit granted (-16.6 million euros via the reduction of the average volume but mostly via the reduction of the interest rates) and the financial asset portfolio (-12.7 million euros via the reduction in the interest rates of these operations). These negative effects were almost fully offset by the favourable effects of volume and price of customer funds and by the lower cost of funds from banks, thus translating in savings of 25.6 million euros). In this context, the strategy of reducing the cost of resources was fundamental to offset the reductions in terms of volume and price of the loans granted.
| (€ thousand) | ||||
|---|---|---|---|---|
| Changes in: | Due to changes in turnover |
Due to changes in interest rate |
Due to changes in period |
Total change |
| Loans and advances to customers | - 5 813 | - 10 747 | - | - 16 560 |
| Deposits with banks | 2 242 | - 752 | - | 1 490 |
| Financial assets | - 978 | - 11 740 | - | - 12 718 |
| Other assets | - 15 | 135 | - | 120 |
| Total net investments | - 4 564 | - 23 104 | - | - 27 668 |
| Deposits from customers | - 5 127 | - 17 980 | - | - 23 107 |
| Deposits from banks | 2 399 | - 5 057 | - | - 2 658 |
| Own assets | 0 | 0 | - | 0 |
| Other liabilities | 90 | 96 | - | 186 |
| Total Assets | - 2 638 | - 22 941 | - | - 25 579 |
| Net interest income | - 1 926 | - 163 | - 2 089 | |
Overall, the effect of volume of activity was larger, both due to the reduction in the loans granted and the drop in customer funds, underscoring an efficient management of interest rates.
As shown on table 3, the average assets of the Bank in the first half of 2014 were backed by customer funds (48.4%) and deposits from banks (41.6%), mostly deposits from Banco Popular Group. Loans and advances to customers is still their main component, representing around 58.1% of total average assets.
| Table 3 . Table – Evolution of equity and average annual rates Margins | ||||||||
|---|---|---|---|---|---|---|---|---|
| (€ thousand and %) | ||||||||
| Jun-14 | Jun-13 | |||||||
| Average Balance |
Dist. (%) |
Income or expense |
Average Rate (%) |
Average Balance |
Dist. (%) |
Income or expense |
Average Rate (%) |
|
| Loans and advances to customers (a) | 5 590 467 58.1% | 102 279 | 3.69 | 5 888 236 64.1% | 118 838 | 4.07 | ||
| Deposits with banks | 1 312 320 13.6% | 2 932 | 0.45 | 449 572 | 4.9% | 1 442 | 0.65 | |
| Financial assets | 2 303 632 23.9% | 28 061 | 2.46 | 2 361 598 25.7% | 40 779 | 3.48 | ||
| Other assets | 412 640 | 4.3% | 209 | 0.10 | 486 166 | 5.3% | 89 | 0.04 |
| Total Assets ( b ) | 9 619 059 | 100% | 133 481 | 2.80 | 9 185 570 | 100% | 161 149 | 3.54 |
| Deposits from customers ( c ) | 4 657 488 48.4% | 50 942 | 2.21 | 5 026 637 54.7% | 74 049 | 2.97 | ||
| Deposits from banks | 3 998 949 41.6% | 9 078 | 0.46 | 3 226 520 35.1% | 11 736 | 0.73 | ||
| Equity accounts | 695 979 | 7.2% | 0 | 0.00 | 670 023 | 7.3% | 0 | 0.00 |
| Other liabilities | 266 643 | 2.8% | 11 387 | 8.61 | 262 390 | 2.9% | 11 201 | 8.61 |
| Total Liabilities and Equity (d) | 9 619 059 | 100% | 71 407 | 1.50 | 9 185 570 | 100% | 96 986 | 2.13 |
| Customer spread (a - c) | 1.48 | 1.10 | ||||||
| Net Interest Income (b - d) | 1.30 | 1.41 |
Taking into consideration the evolution of the average annual interest rates of loans and deposits, we would like to stress that the average assets, which amounted to 9,619 million euros, posted an overall profitability of 2.8%, which, when compared with the average cost of total resources allocated to the financing of assets(1.5%), has enabled an annual net interest income of 1.30%, 11 basis points lower than in the same period last year.
This strategy of reducing of the cost of funds both from customers (77 basis points) and banks, has allowed the Bank to decrease by 63 basis points the average annual rate of liabilities, which stood at 1.50% and compares with 2.13% in the same period last year (table 3a).
The reduction in the average balance of loans is justified by some sales occurred in 2013, having the annual average rate of loans dropped by 38 basis points, from 4.07% to 3.69%. Due to this combined effect, customer spread also increased by 38 basis points to 1.48%.
| Table 3a . Evolution of annual average rates. Margins | ||||||
|---|---|---|---|---|---|---|
| Average annual rate | Average annual rate | Change | ||||
| Jun-14 | Jun-13 | Jun-14 / Jun-13 | ||||
| (%) | (%) | (p.p.) | ||||
| Loans and advances to customers (a) | 3.69 | 4.07 | -0.38 | |||
| Deposits with banks | 0.45 | 0.65 | -0.20 | |||
| Financial assets | 2.46 | 3.48 | -1.03 | |||
| Other assets | 0.10 | 0.04 | 0.07 | |||
| Total Assets ( b ) | 2.80 | 3.54 | -0.74 | |||
| Deposits from customers ( c ) | 2.21 | 2.97 | -0.77 | |||
| Deposits from banks | 0.46 | 0.73 | -0.28 | |||
| Equity accounts | 0.00 | 0.00 | 0.00 | |||
| Other liabilities | 8.61 | 8.61 | 0.00 | |||
| Total Liabilities and Equity (d) | 1.50 | 2.13 | -0.63 | |||
| Customer spread (a - c) | 1.48 | 1.10 | 0.38 | |||
| Net Interest Income (b - d) | 1.30 | 1.41 | -0.11 |
In the first half of 2014, net fees and commissions charged to customers for the sale of products and services totalled 29.8 million euros, rising by over 5 million euros, or 20.7%, when compared with the first half of 2013. Table 4 details the main items that have contributed to changes in net fees and commissions during the first half of the year, which were, on the negative side, fees and commissions on lending transactions with 1.5 million euros less, -18.5%, and, on the positive side, fees and commissions on insurance brokerage with 3.2 million euros more, i.e., 357% more, and fees and commissions on collection and payment methods with 1.8 million euros more, or 30.2%.
| Table 4 . Net fees and commissions | ||||||
|---|---|---|---|---|---|---|
| (€ thousand) | Change | |||||
| Jun-14 | Jun-13 | Amount | % | |||
| Commissions from lending | 6 776 | 8 310 | - 1 534 | -18.5 | ||
| Commissions from guarantees | 3 486 | 3 671 | - 185 | -5.0 | ||
| Commissions from collection and payment handling (net) | 7 683 | 5 899 | 1 784 | 30.2 | ||
| Commissions from asset management (net) | 1 180 | 518 | 662 | 127.7 | ||
| Commissions from insurance sales | 4 196 | 918 | 3 278 | 357.0 | ||
| Commissions from account management | 2 918 | 2 538 | 380 | 15.0 | ||
| Commissions from processing services | 791 | 821 | - 30 | -3.6 | ||
| Other commissions (net) | 2 961 | 2 182 | 779 | 35.7 | ||
| Fees paid to promoters and agents | - 172 | - 159 | - 13 | -8.2 | ||
| Total | 29 819 | 24 698 | 5 121 | 20.7 |
Regarding the remaining items of banking product, we would like to highlight the increase by 6.3 million euros in terms of financial transactions due to the improved performance of the financial assets in the portfolio, which did not offset the -7.8 million euros that resulted from the sale of other assets, mostly properties.
At the end of the first half of the year, banking product was 1.4 million euros higher when compared with the same period last year, which corresponds to a positive change of 1.6%.
In the first half of 2014, operating expenses totalled 57.9 million euros, which represents an increase by 2.4 million euros, or 4.3%, when compared with the same period last year as can be seen in table 5.
(€ thousand)
| jun-14 | jun-13 | Amount | % | |
|---|---|---|---|---|
| Personnel expenses (a) | 28 585 | 27 913 | 672 | 2.4 |
| Wages and salaries | 21 088 | 20 844 | 244 | 1.2 |
| Social security charges | 5 689 | 5 950 | - 261 | -4.4 |
| Pension Fund | 1 465 | 549 | 916 | 167.0 |
| Other expenses | 343 | 570 | - 227 | -39.8 |
| General administrative expenses (b) | 27 293 | 25 112 | 2 181 | 8.7 |
| External supplies | 1 309 | 1 337 | - 28 | -2.1 |
| Rents and leasing | 2 175 | 2 249 | - 74 | -3.3 |
| Communications | 2 222 | 2 033 | 189 | 9.3 |
| Travel, hotel and representation | 578 | 516 | 62 | 11.9 |
| Advertising and publications | 1 892 | 1 160 | 732 | 63.1 |
| Maintenance of premises and equipment | 1 709 | 2 024 | - 315 | -15.6 |
| Transports | 560 | 522 | 38 | 7.2 |
| Fees and regular payment agreements | 3 228 | 3 202 | 26 | 0.8 |
| Legal expenses | 959 | 1 296 | - 337 | -26.0 |
| IT Services | 6 414 | 3 881 | 2 533 | 65.3 |
| Security, surveillance and cleaning | 465 | 590 | - 125 | -21.2 |
| Temporary work | 2 317 | 2 214 | 103 | 4.6 |
| External consultants and auditors | 337 | 347 | - 10 | -2.7 |
| External real estate appraisers | 54 | 147 | - 93 | -63.3 |
| Services rendered by Banco Popular Group | 1 685 | 1 676 | 9 | 0.5 |
| Other services | 1 389 | 1 918 | - 529 | -27.6 |
| Operating expenses (c=a+b) | 55 878 | 53 025 | 2 853 | 5.4 |
| Depreciation (d) | 2 003 | 2 483 | - 480 | -19.3 |
| Total (c+d) | 57 881 | 55 508 | 2 373 | 4.3 |
Personnel expenses amounted to 28.6 million euros, which corresponds to an increase by 2.4%. This increase was due to a larger transfer to the Pension Fund in the amount of around 0.9 million euros. If this transfer hadn't taken place personnel expenses would have maintained its decreasing trend.
General administrative expenses totalled around 27.3 million euros, which corresponds to a 2.2 million euro increase (+8.7%) when compared with the same period last year. This increase in terms of expenses was mostly due to an increase in the items 'IT services' (+2.5 million euros, or 65.3%) and 'Advertising and publications' (+0.7 million euros, or 63.1%).
In terms of allocations for depreciation of fixed assets we have witnessed a positive performance (-0.5 million euros, or -19.3%), which went slightly over 2 million euros.
The cost-to-income ratio, which corresponds to the part of banking income consumed by operating expenses stood at 62.7% (3 pp less when compared with 2013 year-end). The weight of personnel expenses in banking income totalled 31%, which was lower than the 32.8% seen at the end of 2013.
Operating income thus amounted to approximately 34.4 million euros, around 2.7% lower than in the same period last year.
As at 30 June 2014, Net Income for the period exceeded 1.2 million euros, 0.8 million euros less than in the same period last year. This reduction was achieved mostly due to the 2.1 million euro drop in Net Interest Income and the 2.2 million increase in general administrative expenses.
As at 30 June 2014, Banco Popular's net assets amounted to 9,333 million euros, 248 million euros less than in the same period last year, which corresponds to a decrease by around 2.6%.
The Bank also manages other customer funds applied in investment, saving and retirement instruments, which amounted to 985 million euros at the end of the first half of the year, representing a 35% increase when compared with the same period last year.
Therefore, total assets managed by the Bank amounted to 10,318 million euros at the end of the first half of the year, which represents a 0.1% increase when compared with the previous year.
As at 30 June 2014, the total amount of on- and off-balance sheet customer funds amounted to 4,980 million euros, 1.2% more when compared with the same period last year.
On-balance sheet funds, comprised mostly of customer deposits, totalled 3,995 million euros, which corresponds to a decrease by 4.6% when compared with June 2013.
Demand accounts increased by 153.7 million euros, or 21.5%, from 715.5 million euros to 869.2 million euros.
(€ thousand)
| Jun-14 | Jun-13 | Change | ||
|---|---|---|---|---|
| Amount | % | |||
| CUSTOMER FUNDS: | ||||
| Deposits | 3 949 199 | 4 135 003 | - 185 804 | -4.5 |
| Demand accounts | 869 211 | 715 529 | 153 682 | 21.5 |
| Time deposits | 3 075 531 | 3 413 996 | - 338 465 | -9.9 |
| Savings accounts | 4 457 | 5 478 | - 1 021 | -18.6 |
| Cheques, payment orders and other funds | 12 175 | 12 055 | 120 | 1.0 |
| Interest payable | 33 800 | 42 547 | - 8 747 | -20.6 |
| ON-BALANCE SHEET FUNDS ( a ) | 3 995 174 | 4 189 605 | - 194 431 | -4.6 |
| Disintermediation funds | ||||
| Investment funds | 307 259 | 198 819 | 108 440 | 54.5 |
| Investment and capitalisation insurance | 501 366 | 378 615 | 122 751 | 32.4 |
| Retirement insurance plans | 87 501 | 91 367 | - 3 866 | -4.2 |
| Customer portfolio under management | 88 783 | 60 897 | 27 886 | 45.8 |
| OFF-BALANCE SHEET FUNDS ( b ) | 984 909 | 729 698 | 255 211 | 35.0 |
| TOTAL CUSTOMER FUNDS ( a + b ) | 4 980 083 | 4 919 303 | 60 780 | 1.2 |
Off-balance sheet funds – which include investment fund applications, retirement plans, funds raised through investment insurance products, and assets managed through private banking – increased by 35%, rising from 729.7 million euros on 30 June 2013 to 984.9 million euros at the end of the first half of 2014. The positive performance of this item is mostly due to growth in investment funds by over 54.5%, in portfolio management by 45.8%, and in investment and capitalisation insurance by over 32.4%. The evolution of these funds is shown at the bottom of the previous table.
As at 30 June 2014, Banco Popular Portugal was the depositary of 17 investment funds managed by Popular Gestão de Activos, whose total portfolio amounted to 307 million euros on that date. Table 7 shows the composition of each fund managed as at 30 June 2014 and 2013.
(*) Popular Multiactivos results from the merger by incorporation of Popular Multiactivos I, Popular Multiactivos II and Popular Multiactivos III.
As at 30 June 2014, loans and advances to customers totalled around 5,649 million euros, representing 60.5% of total assets, or 57.4% if provisions for past-due loans are deducted. Loans and advances to corporate customers and the public sector amounted to 3,108 million euros (excluding other securitised loans and overdue loans), which corresponds to 62.4% of total lending transactions.
The following table shows the distribution of loans and advances to customers as at 30 June 2014 and 2013.
| Table 8. Loan Transactions | ||||||
|---|---|---|---|---|---|---|
| (€ thousand) | ||||||
| Jun-14 Jun-13 |
||||||
| Amount | % | |||||
| Loans and advances to customers (a) | ||||||
| Public sector | 3 108 726 | 3 483 422 | - 374 696 | - 10.8 |
||
| Private customers | 1 873 358 | 1 874 025 | - 668 | 0.0 | ||
| Residential mortgage loans | 1 475 228 | 1 462 556 | 12 672 | 0.9 | ||
| Personal and consumer loans | 41 461 | 50 051 | - 8 590 | - 17.2 |
||
| Other personal lending | 356 669 | 361 419 | - 4 750 | -1.3 | ||
| Total | 4 982 084 | 5 357 448 | - 375 364 | -7.0 | ||
| Other loans (represented by securities) (b) | 350 398 | 272 300 | 78 098 | 28.7 | ||
| Interest and commissions receivable (c) | 7 836 | 24 168 | - 16 332 | - 67.6 |
||
| Past-due loans and interest (d) | ||||||
| Due within 90 days | 23 522 | 23 963 | - 441 | -1.8 | ||
| Over 90 days | 285 113 | 226 886 | 58 227 | 25.7 | ||
| Total | 308 635 | 250 849 | 57 785 | 23.0 | ||
| Total Gross Lending ( a + b + c + d ) | 5 648 953 | 5 904 765 | - 255 812 | -4.3 | ||
| Specific Loan Provisions | 295 177 | 211 713 | 83 464 | 39.4 | ||
| Total Net Lending | 5 353 776 | 5 693 052 | - 339 276 | -6.0 |
The decrease in the amount of loans and advances to customers was due to a drop by 10.8% in lending to companies and public bodies, or 375 million euros. Lending to private individuals represented 37.6% of total lending and posted a slight drop of 668 thousand euros when compared with the same period last year. This decrease was mostly due to a drop by over 13.3 million euros in items 'Personal and consumer loans' and 'Other lending' which was offset almost entirely by an increase by 12.7 million euros in 'Residential mortgage loans'.
The amount of past-due loans and interest reached 308.6 million euros at the end of the first half of the year, i.e., 23% more when compared with the same period last year. As seen on the following table, this item represented 5.46% of total lending operations. Taking into consideration only loans that have been non-performing for more than 90 days this indicator stands at 5.05%.
Total non-performing loans amounted to 441.7 million euros as at 30 June 2014, which represents 7.82% of total lending operations.
| Quadro 11 - Crédito vencido e Crédito em incumprimento Table 9. Past-due Loans and Non-performing Loans |
||||||
|---|---|---|---|---|---|---|
| (€ thousand) | ||||||
| Jun-14 | Jun-13 | Change | ||||
| Amount | % / p.p. | |||||
| Past-due loans and interest | 308 635 | 250 849 | 57 785 | 23.04 | ||
| Past-due loans by more than 90 days(a) | 285 113 | 226 886 | 58 227 | 25.66 | ||
| Doubtful loans reclassified as past-due loans (b) | 156 647 | 141 496 | 15 152 | 10.71 | ||
| Non-performing loans (a+b) | 441 760 | 368 382 | 73 378 | 19.92 | ||
| Past-due loans / total loans (%) | 5.46 | 4.25 | 1.22 | |||
| Past-due loans over 90 days / total lending (%) | 5.05 | 3.84 | 1.20 | |||
| Non-performing loans / total lending (%) | 7.82 | 6.24 | 1.58 | |||
| Net non-performing loans / total net lending (%) | 2.88 | 2.81 | 0.07 | |||
| Provisions for credit risks | 345 293 | 261 274 | 84 019 | 32.16 | ||
| Hedging ratio (%) | 111.9 | 104.2 | 7.72 | |||
| Memorandum item: | ||||||
| Total lending | 5 648 953 | 5 904 765 | - 255 812 | -4.33 |
At the end of the first half of 2014, provisions for credit risks amounted to 345.3 million euros, ensuring a hedging ratio of 111.9%, which compares with 104.2% in 2013.
In spite of the recent signs of improvement of the economic situation of the country, reflected in the slight GDP growth and the drop in the unemployment rate, the country as a whole and the banking sector in particular still have many challenges to face.
At this point, we would like to identify the main risks that may have an impact on the activity of the Bank during the second half of 2014 and that may lead future results to be materially different from those expected, namely:
Despite the several control mechanisms and the measures implemented to mitigate them, the Bank is exposed to specific risks in its activity, namely:
Operational Risk According to the latest self-assessment exercise regarding operational risks inherent to each area in the Bank, residual risk is concentrated mostly in a low-risk category. Quantitatively, losses due to operational risk in the first half of the year compare favourably with the same period last year and we expect a similar behaviour in the second half of the year.
Reputational and Compliance Risk These are risks to which the Bank is exposed, although the internal governance system reduces the probability of occurrence of events with impact on the results.
In the Notes to the Financial Statements, the above-mentioned risks are more detailed.
(Article 448 of the Commercial Companies Code and Article 20 of the Securities Code 'Código dos Valores Mobiliários')
| Shareholders | No. of Shares | Voting rights % |
|
|---|---|---|---|
| Banco Popular Español, SA | 476 000 000 | 100% | 100% |
Lisbon, 31 July 2014
The Board of Directors
Paragraph (c) of article 246(1) of the Portuguese Securities Code states that each of the responsible persons shall issue a statement as explained therein.
The members of the Board of Directors of Banco Popular Portugal, S.A., identified below by name, have individually signed the following statement:
'Pursuant to paragraph (c) of article 246(1) of the Portuguese Securities Code, I declare that, to the best of my knowledge, the condensed financial statements of Banco Popular Portugal, S.A. referred to the first half of 2014, were drawn up in accordance with the applicable accounting standards, providing a true and fair view of the assets and liabilities, the financial position and the results of that entity and that the interim management report faithfully states the information required in accordance with article 246(2) of the Portuguese Securities Code.'
Lisbon, 31 July 2014
The Board of Directors Rui Manuel Morganho Semedo - Chairman
Carlos Manuel Sobral Cid da Costa Álvares - Member
Tomás Pereira Pena - Member
José Ramón Alonso Lobo - Member
| (€ thousand) | |||||
|---|---|---|---|---|---|
| 3 0 - 0 6 - 2 0 14 |
|||||
| N o te/ T able A nnex |
A mo unt befo re pro visio ns impairment & depreciatio |
P ro visio ns, impairment n & depreciatio n |
N et amo unt |
3 0 - 0 6 - 2 0 13 |
|
| 1 | 2 | 3 = 1 - 2 | |||
| Assets | |||||
| Cash and balances w ith central banks |
17 | 50 712 | 50 712 | 52 219 | |
| Deposits w ith banks |
18 | 66 622 | 66 622 | 68 853 | |
| Financial assets held for trading | 19 | 103 903 | 103 903 | 55 107 | |
| Other financial assets at fair value through profit or loss 20 | 0 | 32 320 | |||
| Available-for-sale financial assets | 21 | 1 869 916 | 1 869 916 | 2 256 880 | |
| Loans and advances to banks | 22 | 1 260 684 | 1 260 684 | 677 770 | |
| Loans and advances to customers | 23 | 5 648 953 | 295 177 | 5 353 776 | 5 693 052 |
| Non-current assets held for sale | 25 | 20 747 | 20 747 | 22 579 | |
| Other tangible assets | 26 | 177 580 | 97 760 | 79 820 | 85 324 |
| Intangible assets | 27 | 20 832 | 20 721 | 111 | 202 |
| Current income tax assets | 15 | 3 566 | 3 566 | 3 053 | |
| Deferred income tax assets | 28 | 78 458 | 78 458 | 72 160 | |
| Other assets | 29 | 484 418 | 39 961 | 444 457 | 561 518 |
| Total Assets | 9 786 391 | 453 619 | 9 332 772 | 9 581 037 | |
| Liabilities | |||||
| Deposits from central banks | 30 | 1 307 918 | 1 307 918 | 1 609 046 | |
| Financial liabilities held for trading | 19 | 36 184 | 36 184 | 32 296 | |
| Deposits from banks | 31 | 2 333 034 | 2 333 034 | 1 807 930 | |
| Deposits from customers | 32 | 3 995 174 | 3 995 174 | 4 189 605 | |
| Debt securities issued | 33 | 711 299 | 711 299 | 1 066 572 | |
| Hedging derivatives | 34 | 119 294 | 119 294 | 89 064 | |
| Provisions | 35 | 51 391 | 51 391 | 52 459 | |
| Current income tax liabilities | 15 | 528 | 528 | 1 860 | |
| Deferred income tax liabilities | 28 | 24 749 | 24 749 | 15 218 | |
| Other liabilities | 36 | 40 767 | 40 767 | 37 281 | |
| Total Liabilities | 8 620 338 | 0 | 8 620 338 | 8 901 331 | |
| Equity | |||||
| Share capital | 39 | 476 000 | 476 000 | 476 000 | |
| Share premium | 39 | 10 109 | 10 109 | 10 109 | |
| Fair value reserves | 40 | - 8 760 | - 8 760 | - 82 585 | |
| Other reserves and retained earnings | 41 | 233 883 | 233 883 | 274 133 | |
| Income for the year | 1 202 | 1 202 | 2 049 | ||
| Total Equity | 712 434 | 0 | 712 434 | 679 706 | |
| Total Liabilities + Equity | 9 332 772 | 0 | 9 332 772 | 9 581 037 |
| (€ thousand) | |||
|---|---|---|---|
| N o te/ T able A nnex |
3 0 - 0 6 - 2 0 14 |
3 0 - 0 6 - 2 0 13 |
|
| Interest and similar income | 6 | 133 481 | 161 149 |
| Interest and similar charges | 6 | 71 407 | 96 986 |
| Net interest income | 62 074 | 64 163 | |
| Return on equity instruments | 7 | 58 | 47 |
| Fees and commissions received | 8 | 34 168 | 29 081 |
| Fees and commission paid | 8 | 4 349 | 4 383 |
| Net gains from financial assets at fair value | |||
| through profit or loss | 9 | - 1 499 | 769 |
| Net gains from available-for-sale financial assets | 9 | 9 702 | 1 064 |
| Net gains from foreign exchange differences | 10 | 562 | 673 |
| Gains from the sale of other assets | 11 | - 5 182 | 2 614 |
| Other operating income | 12 | - 3 214 | - 3 138 |
| Operating income | 92 320 | 90 890 | |
| Personnel expenses | 13 | 28 585 | 27 913 |
| General administrative expenses | 14 | 27 293 | 25 112 |
| Depreciation and amortization | 26/27 | 2 003 | 2 483 |
| Provisions net of reversals and recoveries | 35 | 337 | - 2 129 |
| Adjustments to loans and advances to customers | |||
| (net of reversals and recoveries) | 23 | 35 866 | 32 184 |
| Impairment of other assets net of reversals and recoveries | 29 | - 3 040 | 1 993 |
| Net income before tax | 1 276 | 3 334 | |
| Income tax | 74 | 1 285 | |
| Current tax | 15 | 587 | 218 |
| Deferred tax | 15 | - 513 | 1 067 |
| Net income after taxes | 1 202 | 2 049 | |
| Of w hich: Net income from discontinued operations |
0 | 0 | |
| Net income for the period | 1 202 | 2 049 | |
| Earnings per share (euro) | 0.00 | 0.00 |
Individual Income Statement as at 30 June 2014 and 2013
| (€ thousand) | ||
|---|---|---|
| 30-06-2014 | 30-06-2013 | |
| Net income | 1 202 | 2 049 |
| Other comprehensive income | ||
| Items not reclassified as income | ||
| Retirement pensions | ||
| Recognition of actuarial gains and losses | - 340 | 1 004 |
| - 340 | 1 004 | |
| Items reclassified as income | ||
| Available-for-sale financial assets | ||
| Revaluation of available-for-sale financial assets | 60 602 | 38 474 |
| Tax burden | - 14 918 | - 10 195 |
| 45 684 | 28 279 | |
| Income not recognised in the income statement | 45 344 | 29 283 |
| Individual comprehensive income | 46 546 | 31 332 |
CHIEF ACCOUNTANT THE BOARD OF DIRECTORS
| (€ thousand) | ||||||
|---|---|---|---|---|---|---|
| Share Capital |
Share premium |
Fair value reserves |
Other reserves and retained earnings |
Net income |
Total | |
| Balance as at 01 January 2013 | 476 000 | 10 109 | - 110 807 | 273 896 | 2 692 | 651 890 |
| Transferred to reserves | 2 692 | - 2 692 | 0 | |||
| Actuarial gains and losses | - 11 002 | - 11 002 | ||||
| Others | -56 | 56 | 0 | |||
| Comprehensive income for the period | 56 720 | - 31 720 | 25 000 | |||
| Balance as at 31 December 2013 | 476 000 | 10 109 | - 54 143 | 265 642 | - 31 720 | 665 888 |
| Transferred to reserves | - 31 720 | 31 720 | 0 | |||
| Actuarial gains and losses | - 340 | - 340 | ||||
| Others | - 301 | 301 | 0 | |||
| Comprehensive income for the period | 45 684 | 1 202 | 46 886 | |||
| Balance as at 30 June 2014 | 476 000 | 10 109 | - 8 760 | 233 883 | 1 202 | 712 434 |
(€ thousand)
| Notes | 30-06-2014 | 30-06-2013 | |
|---|---|---|---|
| Operating activities | |||
| Interest, fees and other income received | 140 585 | 148 332 | |
| Interest, fees and other expenses paid | - 56 059 | - 67 509 | |
| Recovery of outstanding loans and interest | 2 185 | 576 | |
| Cash paid to suppliers and employees | - 55 627 | - 50 768 | |
| Contributions to the pension fund | 37 | - 1 524 | 81 |
| Sub-total | 29 560 | 30 712 | |
| Changes in operating assets and liabilities | |||
| Deposits from central banks | - 6 580 | 111 814 | |
| Financial assets held for trading and available for sale | - 35 | - 4 187 | |
| Loans and advances to banks | -1 070 137 | - 254 688 | |
| Deposits from banks | 412 446 | 384 072 | |
| Loans and advances to customers | - 177 718 | 61 564 | |
| Deposits from customers | - 217 204 | 280 041 | |
| Risk management derivatives | 6 128 | ||
| Other operating assets and liabilities | - 41 813 | - 24 990 | |
| Net cash flow from operating activities before | |||
| income taxes | -1 065 353 | 584 338 | |
| Income tax | - 59 | - 51 | |
| Net cash flow from operating activities | -1 065 412 | 584 287 | |
| Investment activities | |||
| Dividends received | 58 | 47 | |
| Purchase of available-for-sale financial assets | - 714 254 | - 910 139 | |
| Sale of available-for-sale financial assets | 646 722 | - 25 656 | |
| Held-to-maturity investments | 0 | 542 167 | |
| Non-current tangible assets held for sale | 101 054 | 0 | |
| Purchase and sale of assets | - 351 | 50 483 | |
| Net cash flow from investment activities | 33 229 | - 343 098 | |
| Cash flow from financing activities | |||
| Issue of ow n equity instruments |
33 | 8 622 | 56 208 |
| Redemption of ow n equity instruments |
- 173 158 | - 16 917 | |
| Net cash flow from financing activities | - 164 536 | 39 291 | |
| Net changes in cash and cash equivalents | |||
| Cash and cash equivalents at the beginning of the period | 46 | 1 487 896 | 227 772 |
| Effect of exchange rate fluctuations on cash and cash equivalents | 659 | 382 | |
| Net changes in cash and cash equivalents | -1 196 719 | 280 480 | |
| Cash and cash equivalents at the end of the period | 46 | 291 836 | 508 634 |
Notes to the Financial Statements
(€ thousand)
The Bank – then named BNC-Banco Nacional de Crédito Imobiliário – was founded on 2 July 1991, following the authorization given by Decree order No. 155/91, of 26 April, issued by the Ministry for Finances. On 12 September 2005, the name of the Bank was changed to Banco Popular Portugal, S.A.
The Bank is authorized to operate pursuant to the rules and regulations currently applicable to banks in Portugal and its corporate purpose is raising funds from third parties in the form of deposits or other, which it applies, together with its own funds, in granting loans or in other assets, also providing additional banking services in the country and abroad.
The accounts of the Bank are consolidated at the parent company, Banco Popular Español, S.A., ('BPE') whose Head Office is located in Madrid, Spain, at 34 Calle Velázquez.
PE accounts are available at its respective Head Office as well on its webpage (www.bancopopular.es).
The Bank is not a listed company.
As a result of the restructuring process initiated in previous years, during 2011, the Bank ceased to hold any equity stake in any subsidiary and ceased to reclassify 'Class D Notes' issued by Navigator Mortgage Finance Nº 1 Plc ('Navigator') into the available-for-sale asset portfolio.
Based on the assumption that the investment in Navigator and its potential impact on the financial statements were considered immaterial, and pursuant to IAS 1 revised, the Bank decided not to prepare consolidated financial statements from 2011 onwards, since that information is not materially relevant for effects of the presentation of the Bank's financial information nor does it influence the decision of the readers of those statements.
Thus, as at 30 June 2014, the Bank detains only one equity stake in the associated company – Companhia de Seguros de Vida, S.A. (see note 25).
The main accounting principles and valuation criteria adopted in the preparation of these financial statements are stated below. These principles were consistently applied to every year presented, except when otherwise stated.
Individual financial statements for Banco Popular Portugal were prepared in accordance with the Adjusted Accounting Standards ('Normas de Contabilidade Ajustadas' - NCA) as defined by Notice No. 1/2005, of 21 February, and defined in Instructions Nos.9/2005 and 23/2004 issued by the Bank of Portugal.
The Adjusted Accounting Standards fundamentally correspond to the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) pursuant to Regulation (EC) No. 1606/2002, of the European Parliament and of the Council, of 19 July, except for the following matters:
As of 1 January 2009, the Bank adopted IFRS 8 – Operating Segments for effects of disclosing financial information analysed by operating segments (see note 5).
An operational segment in a business is a group of assets and operations used to provide products or services, subject to risks and benefits that are different from those seen in other segments.
The Bank determines and presents operational segments based on in-house produced management information.
Associated companies are those in which the Bank has, directly or indirectly, a significant influence over its management and financial policy but does not hold control over the company. It is assumed that the Bank has a significant influence when it holds the power to control over 20% of the voting rights of the associate. Even when voting rights are lower than 20%, the Bank may have significant influence through the participation in managing bodies or the composition of the Executive Boards of Directors.
In the Bank's individual financial statements, associated companies are valued at historical cost. The dividends from associated companies are booked in the Bank's individual results on the date they are attributed or received.
In case of objective evidence of impairment, the loss by impairment is recognised in the income statement.
The financial statements are presented in euros, which is both the functional and presentation currency of the Bank.
Foreign currency transactions are translated into the functional currency using indicative exchange rates prevailing on the dates of transactions. Gains and losses resulting from the conversion of foreign currency transactions, deriving from their extinction and conversion into monetary assets and liabilities in foreign currencies at the exchange rate at the end of each period, are recognised in the income statement, except when they are part of cash flow hedges or net investment in foreign currency, which are deferred in equity.
Conversion differences in non-monetary items, such as equity instruments measured at fair value with changes recognised in net income, are booked as gains and losses at fair value. For non-monetary items, such as equity instruments, classified as available for sale, conversion differences are booked in equity, in the fair value reserve.
Derivative financial instruments are initially recognised at fair value on trade date and subsequently remeasured at fair value. Fair values are based on quoted market prices, including recent market transactions and evaluation models, namely: discounted cash flow models and option valuation models. Derivatives are considered assets when their fair value is positive and liabilities when their fair value is negative.
Certain derivatives embedded in other financial instruments – such as debt instruments whose profitability is indexed to share or share index price – are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not carried at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.
The Bank holds: (i) trading derivatives, measured at fair value – gains and losses arising from changes in their fair value are immediately included in the income statement, and (ii) fair value derivatives accounted for in conformity with note 3.1 a).
Interest income and charges are recognised in the income statement for all instruments measured at amortized cost in accordance with the pro rata temporis accrual method.
Once a financial asset or group of financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Fees and commissions are generally recognised using the accrual method when the service has been provided. Revenue from credit line fees, which are expected to originate a loan, is differed (together with any cost directly related) and recognised as an adjustment at the effective interest rate. Fees and commissions on trades, or participation in third party trades – such as purchasing stock or purchasing or selling a business – are recognised as earned when the service has been provided. Portfolio and other management advisory fees are recognised based on the applicable service contracts – usually recognised proportionally to the time elapsed. Asset management fees related to investment funds are recognised rateably over the period the service is provided.
Financial assets are recognised in the Balance Sheet on trade date – the date on which the Bank commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus direct transaction costs, except for financial assets carried at fair value through profit or loss for which transaction cost are directly recognised in the income statement. Financial assets are derecognised when (i) the rights to receive cash flows from these assets have expired, (ii) the Bank has substantially transferred all risks and rewards of ownership, or (iii) notwithstanding the fact that the Bank may have retained part, but not substantially all, of the risks and benefits associated with holding them, control over the assets was transferred.
Financial assets and liabilities are offset and the net amount booked in the income statement when, and only when, the Bank has a currently enforceable legal right to offset the recognised amounts and intends to settle them on a net basis.
The Bank classifies its financial assets into the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. Management determines the classification of the financial instruments at initial recognition.
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by Management. Derivative financial assets are also categorised as held for trading unless they qualify for hedge accounting.
The fair value option is only used for financial assets and liabilities in one of the following circumstances:
These assets are assessed daily or at each reporting date based on fair value. In the case of bonds and other fixed-income securities the balance sheet contains the amount of unpaid accrued interest.
Gains and losses arising from changes in fair value are included directly in the income statement, which also includes interest revenue and dividends on traded assets and liabilities at fair value. Revenue from interest on financial assets at fair value through profit or loss is carried in net interest income.
Gains and losses arising from changes in the fair value of the derivatives that are managed together with designated financial assets and liabilities are included in item 'Income from assets and liabilities assessed at fair value through profit and loss'.
Loans and receivables includes loans to customers and banks, leasing operations, factoring operations, participation in syndicated loans and securitised loans (commercial paper and corporate bonds) that are not traded in an active market and for which there is no selling intention.
Loans and securitised loans traded in an active market are classified as available-for-sale financial assets.
Loans and receivables are initially recognised at fair value. In general, fair value at inception corresponds to transaction value and includes fees, commissions or other credit-related costs and revenues.
Subsequently, loans and receivables are valued at amortised cost based on the effective interest rate method and subject to impairment tests.
Interest, fees, commissions and other credit-related costs and revenues are recognised on an accrual basis over the period of the transactions regardless of the moment when they are charged or actually paid. Fees on loan commitments are recognised on a deferred and linear basis during the lifetime of the commitment.
The Bank classifies as non-performing loans instalments of principal or interest after, at most, thirty days of their due date. In case of litigation, all principal instalments are considered nonperforming (current and past due).
Credit to customers includes advances within factoring operations with recourse and the amount of the invoices granted without recourse, whose intention is not a short run sale, and is recorded on the date the accounts receivable are assigned by the seller of the product or service who issues the invoice.
Accounts receivables assigned by the issuer of the invoices or other commercial credits for recourse or non-recourse factoring are registered on assets under the item Loans and advances to customers. As a counterpart it changes the item 'Other liabilities'.
When invoices are taken with recourse but cash advances on those respective contracts have not been made yet, they are registered in off-balance sheet accounts on the amount of the invoices that have been received. The off-balance sheet account is rectified as the cash advances are made.
Commitments arising from credit lines to factoring customers that have not been utilized yet are registered in off-balance sheet accounts.
Liabilities for guarantees granted and irrevocable commitments are registered in off-balance sheet accounts by the value at risk and interest flows, commissions or other revenues recorded in the income statement during the lifetime of the operations. These operations are subject to impairment tests.
This item includes non-derivative financial assets with fixed or determinable payments and defined maturities that the Bank has the intention and ability to hold to maturity.
These assets are initially recognised at fair value, minus possible commissions included in the effective rate, plus all direct incremental costs. They are subsequently valued at amortised cost, using the effective interest rate method and subject to impairment tests. If during a subsequent period the amount of the loss of impairment decreases, and that decrease may be objectively tied to an event that happened after the impairment was recognised, this is reversed through the income statement.
Available-for-sale financial assets are non-derivative financial assets that: (i) the Bank intends to keep for an undetermined period of time, (ii) are recognised as available for sale at inception, or (ii) are not categorized into any of the other categories described above.
This item includes:
Fixed-income securities that have not been classified in the trading book or the credit portfolio, or held-to-maturity investments;
Available-for-sale assets are recognised at fair value, except for equity instruments that are not listed on any active market and whose fair value may not be reliably measured or estimated, in which case they are recognised at cost value.
Gains and losses arising from changes in the fair value of available-for-sale financial assets are directly recognised in equity in item Fair value revaluation reserves, except for impairment losses and foreign exchange gains and losses of monetary assets, until the asset is sold, when the gain or loss previously recognised in equity is carried in the income statement.
Interest from bonds and other fixed-income securities and the differences between acquisition cost and the nominal value (premium or discount) are registered in the income statement using the effective rate method.
Revenue from variable-income securities (dividends in the case of shares) are booked in the income statement on the date they are attributed or received. According to this criterion, interim dividends are recorded as profit in the exercise their distribution is decided.
In case of objective impairment evidence – resulting from a significant and prolonged decline in the fair value of the security or from financial problems on the part of the issuer – the cumulative loss on the fair-value revaluation reserve is removed from equity and recognised in the income statement.
Impairment losses on fixed-income securities may be reversed on the income statement if there is a positive change in the security's fair value as a result of an event that occurred after the initial impairment recognition. Impairment losses on variable-income securities may not be reversed. In the case of impaired securities, subsequent negative fair-value changes are always recognised in the income statement.
Exchange rate fluctuations of non-monetary assets (equity instruments) classified in the available-for-sale portfolio are registered in fair-value reserves. Exchange rate fluctuations in the other securities are recorded in the income statement.
The Bank assess on each balance sheet date whether there is objective evidence that a financial asset, or group of financial assets, is impaired. A financial asset, or group of financial assets, is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. Objective evidence that an asset, or group of assets, is impaired, includes observable data, that the Bank is aware of, regarding the following loss events:
(iii) concessions granted to the borrower, for reasons relating to the borrower's financial difficulty, that the lender would not have otherwise considered;
(iv) high probability that the borrower will go into bankruptcy or other financial reorganisation;
(v) disappearance of an active market for that financial asset because of financial difficulties;
The Bank initially assesses whether objective evidence of impairment exists for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes that asset in a group of financial assets with similar credit risk and collectively assesses them for impairment.
If there is objective evidence of an impairment loss on loans and receivables, or held-tomaturity investments, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future impairment losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the provisions account. The Bank may also determine impairment losses through the instrument's fair value at observable market prices.
When analysing impairment in a portfolio, the Bank estimates the probability of an operation or a customer to default during the estimated period between impairment occurring and the loss being identified. Usually, the time frame used by the Bank is of around 6 months.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar risk characteristics (i.e., based on the Bank's classification process that takes into account asset type, geographical location, collateral type, past due status and other relevant factors). These characteristics are relevant to estimate future cash flows for groups of financial assets by being indicative of the counterpart's ability to pay all amounts due according to the contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted based on current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.
If, in a subsequent period, the amount of the impairment loss decreases and that decrease can be related objectively to an event occurring after the impairment was recognised (e.g., improvement in a debtor's credit rating), the previously recognised impairment loss is reversed through the provisions account. The amount of the reversal is recognised directly in the income statement.
Loans to customers whose terms have been renegotiated are no longer considered past due and are treated as new loan contracts. Restructuring practices may include; extension of payment conditions, approval of management plans, payment change and deferral. Restructuring practices and policies are based on criteria that, from the point of view of the Bank's management, indicate that payment has a high probability of occurring.
The Bank assess at each balance sheet date whether there is objective evidence that a financial asset, or group of financial assets, is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, minus any impairment loss on that financial asset previously recognised in the income statement — is removed from equity and recognised in the income statement.
Impairment losses on equity instruments that have been recognised in the income statement are not reversible. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and growth can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the income statement.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives.
Costs associated with software development and maintenance are recognised as expenses when incurred. Costs directly associated with developing unique and identifiable software, controlled by the Bank and where it is probable that they will generate future economic benefits, are recognised as intangible assets.
Costs associated with software development recognised as assets are amortized during its useful life using the straight-line method.
The Bank's property is comprised essentially of offices and branches. All tangible assets are stated at historical cost minus depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Land is not depreciated. Depreciation of other tangible assets is calculated using the straightline method to allocate their cost to their residual values over their estimated useful lives, as follows:
| Estimated useful life (years) | |
|---|---|
| Freehold buildings | 50 |
| Adaptation works in leasehold | 10, or during the lease period if lower than 10 |
| property | years |
| Furniture, fixtures and fittings | 5 to 8 |
| Computers and similar | 3 to 4 |
| equipment | |
| Transport equipment | 4 |
| Other tangible assets | 4 to 10 |
Tangible assets subject to depreciation are submitted to impairment tests whenever events or changes in certain circumstances indicate their carrying amount may no longer be recovered. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher between the value in use and the asset's fair value, minus sale costs.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These gains and losses are included in the income statement.
Assets acquired in exchange for loans (real estate property, equipment and other assets) are recorded in the item Tangible assets held for sale by the value stated in the agreement that regulates the asset's delivery, which corresponds to the lower of the outstanding amount of the debt or the asset's evaluation at the time of its delivery.
The Bank's policy for this type of assets is to sell them as soon as possible.
These assets are periodically assessed and impairment losses are recognised whenever the result of that appraisal is lower than the asset's book value (see note 29).
Potential realised gains on these assets are not recorded in the Balance Sheet.
Leases entered by the Bank are essentially related to transport equipment, where there are contracts classified as financial leases and others as operating leases.
Payments made on operating leases are recognised in the income statement.
When an operating lease is terminated before the end of the lease period, any payment required by the lessor, by way of compensation, is recognised as an expense in the period the operation is terminated.
Financial leases are capitalised at the inception of the lease in the respective item of tangible or intangible assets, as a counterpart to the item Other liabilities, at the lower of (i) the fair value of the leased asset and (ii) the present value of the minimum lease payments. Incremental costs paid for leases are added to the recognised asset. Tangible assets are depreciated pursuant to note 2.11. Rents are comprised of (i) financial cost charged to expenses and (ii) financial depreciation of premium which is deducted from the item Other liabilities. Financial charges are recognised as expenses over the lease term so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. However, when there is no reasonable certainty that the Bank will obtain possession of the asset at the end of the lease, the asset must be totally depreciated during the smaller of the lease period or its useful life.
Assets held under a financial lease are recognised as an expense in the period to which they relate by the current amount of the payments to be made. The difference between the gross amount receivable and the current balance receivable is recognised as receivable financial income.
Interest included in the rents charged to customers is registered as income, while principal depreciation, also included in the rents, is deducted from the overall amount initially lent. Recognition of the financial result reflects a constant periodical return rate over the remaining net investment of the lessor.
Provisions for restructuring costs and legal expenses are recognised whenever: the Bank has a legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle that obligation; the amount can be reliably estimated.
In the financial statements, the credit and guarantee portfolio is subject to provisioning pursuant to the terms of Notice No. 3/95 issued by the Bank of Portugal, namely for:
(i) a specific provision for past due credit and interest presented in assets as a deduction to the item Loans and advances to customers, calculated using rates that vary between 0.5% and 100% on past due loan and interest balances, according to risk classification and whether secured or unsecured with collaterals (see note 23);
(ii) a specific provision for doubtful loans, recognised in assets as a deduction from the item Loans and advances to customers, which corresponds to the application of the rates foreseen for non-performance classes, to instalments reclassified as past due in a single credit operation, as well as its application to the outstanding loan instalments of any single customer, where it was ascertained that the past due instalments of principal and interest exceeded 25% of principal outstanding plus past due interest, of half the provisioning rates applicable to credit past due (see note 23);
(iii) a general provision for credit risks, presented as a liability in item Provisions for risks and charges, corresponding to a minimum of 1% of total outstanding credit, including guarantees and other instruments, except for consumer loans, where the provisioning rate was at least 1.5% of such loans, and for mortgage loans whenever the real estate asset (collateral) was for the borrower's own use, in which case the minimum rate of 0.5% is applied (see note 35); and
(iv) a provision for country risk, constituted to face the risk attached to financial assets and off-balance sheet elements on residents from high risk countries according to Instruction No. 94/96 issued by the Bank of Portugal (see notes 23 and 35).
In compliance with the Collective Bargaining Agreement (ACT) for the banking sector, the Bank has established a Pension Fund designed to cover retirement benefits on account of age, including disability, and survivor's benefits, set up for the entire work force, calculated based on projected salaries of staff in active employment. The pension fund is supported by the contributions made, based on the amounts determined by periodic actuarial calculations. A defined benefit plan is a pension plan that generally defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
Every year the Bank determines the amount of liabilities for past services using actuarial calculations based on the Project Unit Credit method for liabilities for past services in the case of old age and the Unique Successive Premium to calculate disability and survivor's benefits. The actuarial assumptions (financial and demographic) are based on expectation at the balance sheet date for the growth in salaries and pensions and are based on mortality tables adapted to the Bank's population. The discount rate is determined based on market rates for high quality corporate bonds, with periods to maturity similar to those for settlement of pension liabilities. The assumptions are mutually compatible. The amount of liabilities includes, besides retirement pensions, post-employment medical care (SAMS) and postretirement death benefits.
Until 31 December 2012, the Bank recognized the net accumulated amount (after 1 January 2004) of actuarial gains and losses resulting from changes in the financial and actuarial assumptions and differences between the financial and actuarial assumptions used and the actual amounts in the item Other Assets or Other Liabilities – Actuarial deviations.
Accumulated actuarial gains or losses that did not exceed 10% of the highest of the current value of liabilities for past services or the value of the pension funds were included in the
'corridor'. Actuarial gains and losses in excess of the corridor were recognised against results over the average remaining period of service of the employees covered by the plan.
As at 1 January 2013 the Bank changed its accounting policy of recognising financial and actuarial gains and losses for pension plans and other defined benefit post-employment benefits (see 2.15 Employee Benefits) according to IAS 19 Revised. Financial and actuarial gains and losses are now recognised in the period they occur directly in equity in the Statement of Comprehensive Income.
Increases in past service liabilities resulting from early retirement are fully recognised as expenses in the income statement for the year in which they occur.
Increases in past service liabilities resulting from changes in the conditions of Pension Plans are fully recognised as expenses in the case of acquired benefits or depreciated during the period that remains until those benefits are acquired. The balance of the increases in liabilities not yet recognised as expenses are registered in the item 'Other Assets'.
Past service liabilities (post-employment benefits) are covered by a pension fund. The amount of the pension funds corresponds to the fair value of its assets at the balance sheet date.
The financing regime by the pension fund is established in Notice No. 4/2005 issued by the Bank of Portugal, which determines the compulsory fully financing pension liabilities and a minimum level of 95% financing of past service liabilities for staff in active employment.
In the Bank's financial statements, the amount of past service liabilities for retirement pensions, minus the amount of the pension fund, is stated in item Other Liabilities.
The Bank's income statement includes the following expenses related to retirement and survivor pensions:
On the transition date, the Bank adopted the possibility permitted by IFRS 1 of not recalculating deferred actuarial gains and losses from the beginning of the plans (normally known as the reset option). Thus, deferred actuarial gains and losses recognised in the Bank's accounts as at 31 December 2003 were fully reversed in retained earnings on the transition date – 1 January 2004.
In compliance with the Collective Bargaining Agreement (ACT) for the banking sector in Portugal, the Bank has committed to attribute to active staff that complete fifteen, twenty-five and thirty years of good and effective service, a seniority bonus equal, respectively, to one, two or three months of their effective monthly salary on the year of the attribution.
Every year the Bank determines the amount of liabilities for seniority bonuses using actuarial calculations based on the Project Unit Credit method for liabilities for past services. The actuarial assumptions (financial and demographic) are based on expectation at the balance sheet date for the growth in salaries and pensions and are based on mortality tables adapted to the Bank's population. The discount rate is determined based on market rates for high quality corporate bonds, with periods to maturity similar to those for settlement of pension liabilities. The assumptions are mutually compatible.
Liabilities for seniority bonuses are recognised in the item 'Other Liabilities'.
The Bank's income statement includes the following expenses regarding seniority bonus liabilities:
Deferred taxes are recognised using the balance sheet debt method, based on temporary differences arising from the differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using the effective tax rate on profits at the balance sheet date which is expected to apply when the deferred tax asset is realised or the deferred tax liability is settled.
Deferred income tax is recognised when it is probable that in the future there is enough tax on profits so that it can be used.
Taxes on profits based on the application of legal rates for each jurisdiction are recognised as expenses in the period when the profit is originated. The tax effect of reportable tax losses are recognised as an asset when it is likely that the future profitable profit is enough for the reportable tax loss to be utilized.
Deferred tax related to fair value revaluation of an available-for-sale asset, which is charged or credited directly in equity, is also credited or charged in equity and subsequently recognised in the income statement together with deferred gains or losses.
The Bank classifies its financial liabilities into the following categories: held-for-trade financial liabilities, other financial liabilities at fair value through profit and loss, deposits from central bank, deposits from other banks, customer deposits, securitised liabilities and other subordinated liabilities. Management determines the classification of the financial instruments at initial recognition.
This item essentially includes deposits whose yield is indexed to stock portfolios or indexes and the negative fair value of derivative contracts. The evaluation of these liabilities is made based on fair value. The balance sheet value of deposits includes the amount in accrued interest not paid.
After the initial recognition, deposits and other financial assets from customers, central banks and other banks are revalued at amortized cost based on the effective interest rate method.
These liabilities are initially recognised at fair value, which is the amount for which they were issued net of transaction costs incurred. These liabilities are subsequently measured at amortized cost and any difference between the net amount received on transaction and their redemption value is recognised in the income statement over the liability period using the effective interest rate method.
If the Bank acquires its own debt, this amount is removed from the balance sheet and the difference between the balance sheet amount of the liability and the amount spent to acquire it is recognised in the income statement.
Non-current assets, or disposal groups, are classified as held for sale whenever their book value is recoverable through sale. This condition can only be met when the sale is highly probable and the asset is available for immediate sale in its current condition. The sale must be performed within one year from the date on which they are included in this item. An extension of the period during which the asset must be sold does not exclude that asset, or a disposal group, from being classified as held for sale if the delay is caused by an event or circumstances that the Bank cannot control and if the selling purpose is maintained. Immediately before the initial classification of the asset, or disposal group, as held for sale, the book value of non-current assets (or of every asset and liability in the group) is carried pursuant to the applicable IFRS. Subsequently these assets, or disposal group, will be remeasured at the lower between the initial carrying amount and the fair value minus selling costs.
In view of its activity, the Bank raises funds essentially through customer deposits and monetary market operations.
Besides the activities of credit granting, the Bank also applies its funds in financial investments, particularly in the group of investments that currently comprise the Bank's portfolio.
The Bank's portfolio – including available-for-sale financial assets and trading portfolio – amounted to around 1.96 billion euros at the end of the first half of 2014, representing around 21% of the Bank's total net assets. The typology of these assets was broken down as follows: public Portuguese debt (0.7%), public Spanish debt (71.6%), banks (23.2%) and others (4.5%).
To hedge its investment against interest rate risk, the Bank carried out interest rate swap operations and monetary market operations, thus trying to control the variability of interest rate risk and the flows generated by these assets.
Gains and losses resulting from the revaluation of hedge derivatives are recognised in the income statement. Gains and losses deriving from differences in terms of the fair value of hedged financial assets and liabilities, corresponding to the hedged risk, are also recognised in the income statement as a counterpart for the carrying value of the hedged assets and liabilities, in the case of operations at amortized cost, or by counterpart of the reserve for fair value revaluation in the case of available-for-sale assets.
Efficacy tests for hedges are accordingly documented on a regular basis, ensuring the existence of proof during the lifetime of the hedged operations. If the hedge no longer meets the criteria demanded by hedge accounting, it shall be prospectively discontinued.
In a cash flow hedge, the effective part of the changes in fair value for the hedged derivative is recognised in reserves, and transferred to the income statement in the periods when the respective hedged item affects results. If it is foreseeable that the hedged operation will not take place, the amounts still stated in equity are immediately recognised in the income statement and the hedged instrument is transferred to the trading book.
The Bank is exposed to a certain cash flow risk as regards open positions in foreign currency. However, in view of the little materiality of the normally existing overall position, no hedge operations are carried out in this case.
The Board of Directors considered that as at 30 June 2014, the fair value of assets and liabilities at amortised cost did not differ significantly from its book value.
In order to determine the fair value of a financial asset or liability, its market price is applied whenever there is an active market for it. In case there is no active market, which happens with some financial assets and liabilities, generally accepted valuation techniques based on market assumptions are employed.
The net income of financial assets and liabilities at fair value that have not been classified as hedging includes an amount of 9 275 thousand euros (2013: 2 005 thousand euros).
Consequently, the fair value change recognized in the income statement for the period is analysed as follows:
| 30-06-2014 | 30-06-2013 | |||
|---|---|---|---|---|
| Fair value | Change | Fair value | Change | |
| Financial assets at fair value through profit or loss | ||||
| Trading derivatives | ||||
| Interest rate sw aps |
32 498 | 13 974 | 31 598 | 26 579 |
| Futures | 79 | - | 34 | - |
| Options | 11 | 393 | 82 | 825 |
| Available-for-sale financial assets | ||||
| Debt instruments issued by residents | 47 151 | 212 | 622 831 | - |
| Equity instruments issued by residents | 653 | - | 612 | - |
| Debt instruments issued by non-residents | 1 822 048 | 9 490 | 1 633 371 | 1 064 |
| Equity instruments issued by non-residents | 63 | - | 65 | - |
| Financial liabilities at fair value through profit or loss | ||||
| Trading derivatives | ||||
| Interest rate sw aps |
36 053 | - 14 721 | 32 190 | - 26 372 |
| Futures | 112 | - | 23 | - |
| Options | 19 | - 73 | 83 | - 91 |
| 9 275 | 2 005 |
The table below classifies fair value assessment of the Bank's financial assets and liabilities based on a fair value hierarchy that reflects the significance of the inputs that were used in the assessment, according to the following levels:
Level 1: market prices (unadjusted) in active markets for identical assets of liabilities;
Level 2: different inputs for market prices included in Level 1 that are observable for assets and liabilities either directly (i.e., as prices) or indirectly (i.e. derived from the prices);
Level 3: inputs for assets and liabilities that are not based on observable market data (non-observable inputs).
| 30-06-2014 30-06-2013 |
||||||||
|---|---|---|---|---|---|---|---|---|
| Assets and liabilities at fair value |
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Financial assets held for trading Variable income securities Derivatives |
2 692 - |
- 32 588 |
68 622 - |
71 314 32 588 |
2 792 - |
- 31 714 |
20 601 - |
23 393 31 714 |
| Other financial assets at fair value through profit or loss Fixed income securities |
- | - | - | 0 | 32 319 | - | - | 32 319 |
| Available-for-sale financial assets Debt securities Equity securities Total assets at fair value |
1 864 032 - 1 866 724 |
5 168 - 37 756 |
- 716 69 338 |
1 869 200 716 1 973 818 |
2 250 980 - 2 286 091 |
5 223 36 937 |
- 677 21 278 |
2 256 203 677 2 344 306 |
| Financial liabilities held for trading (Derivatives) Hedging derivatives |
- - |
36 184 119 295 |
- - |
36 184 119 295 |
- - |
32 296 89 064 |
- - |
32 296 89 064 |
| Total liabilities at fair value | 0 | 155 479 | 0 | 155 479 | 0 | 121 360 | 0 | 121 360 |
The Bank is exposed to credit risk, which is the possible loss that arises when the Bank's counterparts fail to fulfil their obligations. In the case of lending, it implies the loss of principal, interest and commissions, in the terms regarding amount, period and other conditions set forth in the contracts. Concerning off-balance sheet risks, it derives from the non-compliance of the counterparts regarding their obligations with third parties, which implies that the Bank has to assume as its own certain obligations depending on the contracts.
The Bank structures the levels of credit risk it is exposed to by establishing pre-defined acceptable risk amounts regarding the borrower or group of borrowers and geographical or business activity segments.
Exposure to credit risk is managed through a regular analysis of the capacity of borrowers and potential borrowers of meeting payment obligations for principal and interest, and by changing these loan limits when appropriate. Exposure to credit risk is also managed in part by obtaining collaterals and personal or corporate guarantees.
The Bank employs a series of policies and practices in order to mitigate credit risk. The most traditional one is securing collaterals at the moment funds are advanced. The Bank implements guidelines regarding the acceptability of specific classes of collaterals or mitigation of credit risk. The main types of collaterals for loans and receivables are:
Long term loans to corporate and private customers usually require a collateral; lower amounts and recurring personal loans generally require no collateral. Additionally, with the intention of minimising loss, at the time an impairment indicator for loans and receivables is identified the Bank tries to obtain additional collaterals from the relevant counterparts.
Collaterals held for financial assets, except for loans and advances, are determined by the nature of the instrument. Debt instruments, treasury bonds and other securities usually are not collateralised.
The main objective of these instruments is to ensure that funds are made available to customers as they require them. Loan extension commitments represent non-utilized parts of credit extension authorizations in the form of loans, guarantees or letters of credit. Regarding the credit risk associated with loan extension commitments, the Bank is potentially exposed to a loss in the amount of the total of non-utilized commitments. However, the probable loss amount is much lower than the sum of the non-utilized commitments since loan extension commitments are revocable and depend on a specific customer's credit worthiness. The Bank monitors the maturity of lending commitments since long term commitments usually present a greater credit risk than short term commitments.
As at 30 June 2014 and 2013, maximum exposure to credit risk was as follows:
| 30-06-2014 | 30-06-2013 | |
|---|---|---|
| On-balance sheet | ||
| Deposits w ith banks |
66 622 | 68 853 |
| Financial assets held for trading | 32 588 | 31 714 |
| Other financial assets at fair value through profit or loss | 32 320 | |
| Available-for-sale financial assets | 1 869 200 | 2 256 202 |
| Loans and advances to banks | 1 260 684 | 677 770 |
| Loans and advances to customers | 5 353 776 | 5 693 052 |
| Other assets | 262 883 | 222 622 |
| 8 845 753 | 8 982 533 | |
| Off-balance sheet | ||
| Financial guarantees | 420 400 | 445 858 |
| Other guarantees | 108 615 | 113 979 |
| Lending commitments | 828 153 | 662 387 |
| Documentary credits | 39 633 | 45 400 |
| 1 396 801 | 1 267 624 | |
| Total | 10 242 554 | 10 250 157 |
The table above shows the worst case scenario in terms of the level of exposure to credit risk the Bank faced as at 30 June 2014 and 2013, without considering any collateral held or other credit enhancements. For on-balance sheet assets, the above stated exposure is based on their carrying amount on the balance sheet.
As can be seen on the table above, 60.4 % of total maximum exposure results from loans and advances to customers (2013: 62.0%).
The Bank's management trusts its capacity to control and maintain a minimal exposure to credit risk, which results mainly from its customer portfolio, based on the following assumptions:
The tables below show the exposure of the Bank according to the assets' carrying amount (excluding accrued interest) broken down by activity segment.
| 3 0 - 0 6 - 2 0 14 |
Financial Institutions |
Public Sector |
Property constr. & Development |
Other industries |
Services | Private individuals Home loans Other loans |
|
|---|---|---|---|---|---|---|---|
| Deposits with banks | 66 622 | ||||||
| Financial assets held for trading | 72 506 | 18 554 | 60 | 12 783 | |||
| Available- for- sale financial assets |
424 758 | 1 418 681 | 26 476 | ||||
| Loans and advances to banks | 1 260 561 | ||||||
| Loans and advances to customers | 3 601 | 833 816 | 886 548 | 2 171 180 | 1 491 505 | 254 467 | |
| Non- current assets held for sale |
20 747 | ||||||
| Other assets | 158 334 | 18 210 | |||||
| 2 003 528 | 1 440 492 | 852 370 | 886 608 | 2 210 439 | 1 491 505 | 254 467 |
| Public Sector |
Property constr. & Development |
Other industries |
Services | Private individuals | Home loans Other loans |
|---|---|---|---|---|---|
| 116 | |||||
| 7 624 | |||||
| 1 580 023 | 29 560 | ||||
| 32 185 | 1 160 451 | 847 452 | 2 114 893 | 1 479 534 | 246 083 |
| 90 875 | |||||
| 1 710 707 | 1 175 361 | 847 480 | 2 159 163 | 1 479 534 | 246 199 |
| Financial Institutions 68 853 25 343 24 695 647 297 677 770 120 806 1 564 764 |
14 910 | 28 | 14 710 |
The Bank operates fully on the national market. Therefore, it is not relevant to perform an analysis by geographical sector, since there is no identifiable item within a specific economic environment that is subject to differentiated risks or benefits.
Market Risk is the probability of negative impact on the Bank's earnings or capital due to adverse changes in the market prices of the instruments in the trading book, caused by the volatility of equity prices, interest rates and foreign exchange rates.
As at 30 June 2014, the Bank's portfolio amounted to around 1.96 billion euros, of which around 71 million were classified as financial assets held for trading and other financial assets at fair value through profit or loss. The Bank uses value at risk (VaR) as an instrument to manage the trading portfolio risk.
In the scope of the stress test performed, Banco Popular carries out a sensitivity analysis to a 30% fluctuation in stock indexes.
We would like to add that on that date, market risk (debt instruments) represented around 0.2% of capital requirements, calculated pursuant to Instruction No. 23/2007 issued by the Bank of Portugal.
The national currency equivalent, in thousands of euros, of assets and liabilities at sight expressed in foreign currency is as follows:
| 30 June 2014 | USD | GBP | CHF | JPY | CAD | Other |
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and cash equivalents | 314 | 131 | 320 | 43 | 13 | 80 |
| Deposits w ith banks |
19 392 | 1 371 | 248 | 8 | 521 | 1 074 |
| Available-for-sale financial assets | 47 | - | - | - | - | - |
| Loans and advances to banks | 66 114 | 1 809 | - | - | - | - |
| Loans and advances to customers | 1 725 | 7 | - | - | - | - |
| Other assets | 1 141 | 12 | 4 | - | 5 | 252 |
| 88 733 | 3 330 | 572 | 51 | 539 | 1 406 | |
| Liabilities | ||||||
| Deposits from banks | 68 856 | 13 975 | 190 | 58 | 25 | 60 |
| Due to customers | 42 524 | 8 380 | 221 | - | 551 | 6 938 |
| Other liabilities | 508 | 363 | 8 | 5 | 2 | 251 |
| 111 888 | 22 718 | 419 | 63 | 578 | 7 249 | |
| Net balance sheet position | - 23 155 | - 19 388 | 153 | - 12 | - 39 | - 5 843 |
| Forw ard transactions |
22 024 | 19 305 | - | - | - | - |
| Net balance sheet position | - 1 131 | - 83 | 153 | - 12 | - 39 | - 5 843 |
| 30 June 2013 | ||||||
| Total Assets | 30 323 | 21 791 | 342 | 43 | 11 476 | 11 509 |
| Total liabilities | 139 372 | 21 976 | 217 | 31 | 11 401 | 11 594 |
| Net balance sheet position | - 109 049 | - 185 | 125 | 12 | 75 | - 85 |
| Forw ard transactions |
106 807 | - | - | - | - | - |
| Net balance sheet position | - 2 242 | - 185 | 125 | 12 | 75 | - 85 |
The activity of Banco Popular Portugal regarding foreign currency consists in making transactions based on customer operations. In this framework, the overall foreign exchange position of the Bank is virtually non-existent.
Thus, as can be seen, whatever the impact of foreign currency prices on foreign exchange terms, it is financially immaterial for the Bank's income, which is why no risk-sensitivity analysis are carried out.
This risk assesses the impact on net interest income and equity as a result in fluctuation in market interest rates.
The interest rate risk of the balance sheet is measured using a repricing gap model applied to assets and liabilities that are susceptible to interest rate fluctuations pursuant to Instruction No. 19/2005 issued by the Bank of Portugal. Briefly, this model groups assets and liabilities that are sensitive to fluctuations at fixed time brackets (maturity dates or the first interest rate revision in case of indexation), from which one calculates the potential impact on the intermediation margin.
| Up to 1 month | 1 to 3 months |
3 to 12 months |
1 to 5 years |
Not sensitive | Total | |
|---|---|---|---|---|---|---|
| Monetary market | 332 590 | 2 348 | 995 832 | - | 47 248 | 1 378 018 |
| Loans and advances to customers | 1 516 863 | 2 422 988 | 1 141 080 | 240 829 | 32 016 | 5 353 776 |
| Securities market | 52 904 | 731 051 | 343 947 | 748 427 | 97 489 | 1 973 818 |
| Other assets | - | - | - | - | 627 160 | 627 160 |
| Total Assets | 1 902 357 | 3 156 387 | 2 480 859 | 989 256 | 803 913 | 9 332 772 |
| Monetary market | 2 856 654 | 338 621 | 317 541 | 118 750 | 9 385 | 3 640 951 |
| Deposit market | 378 583 | 471 302 | 1 666 110 | 1 434 894 | 44 286 | 3 995 175 |
| Securities market | 520 093 | 6 881 | 67 604 | 114 555 | 2 166 | 711 299 |
| Other liabilities | - | - | - | - | 272 913 | 272 913 |
| Total Liabilities | 3 755 330 | 816 804 | 2 051 255 | 1 668 199 | 328 750 | 8 620 338 |
| Gap | -1 852 973 | 2 339 583 | 429 604 | - 678 943 | 475 163 | |
| Accumulated gap | -1 852 973 | 486 610 | 916 214 | 237 271 | 712 434 | |
| M aturity and repricing gap for the Bank's activity as at 30 June 2013 |
||||||
| Gap | - 448 940 | 1 726 282 | 793 659 | -2 074 160 | 682 865 | |
| Accumulated gap | - 448 940 | 1 277 342 | 2 071 001 | - 3 159 | 679 706 |
Pursuant to the referred to model, the Bank calculates the potential impact on net interest income and net income.
In the table below, this model considers a potential 1% immediate impact on interest rates, i.e., on the date interest rates are revised. Therefore, the new interest rates will start to show this effect both on assets and liabilities.
| Up to 1 month | 1 to 3 months |
3 to 12 months |
Over 12 months |
Not sensitive | Total | |
|---|---|---|---|---|---|---|
| Monetary market | 332 590 | 2 348 | 995 832 | - | 47 248 | 1 378 018 |
| Loans and advances to customers | 1 516 863 | 2 422 988 | 1 141 080 | 240 829 | 32 016 | 5 353 776 |
| Securities market | 52 904 | 731 051 | 343 947 | 748 427 | 97 489 | 1 973 818 |
| Other assets | - | - | - | - | 627 160 | 627 160 |
| Total Assets | 1 902 357 | 3 156 387 | 2 480 859 | 989 256 | 803 913 | 9 332 772 |
| Monetary market | 2 856 654 | 338 621 | 317 541 | 118 750 | 9 385 | 3 640 951 |
| Deposit market | 378 583 | 471 302 | 1 666 110 | 1 434 894 | 44 286 | 3 995 175 |
| Securities market | 520 093 | 6 881 | 67 604 | 114 555 | 2 166 | 711 299 |
| Other liabilities | - | - | - | - | 272 913 | 272 913 |
| Total Liabilities | 3 755 330 | 816 804 | 2 051 255 | 1 668 199 | 328 750 | 8 620 338 |
| Gap | -1 852 973 | 2 339 583 | 429 604 | - 678 943 | 475 163 | |
| Accumulated gap | -1 852 973 | 486 610 | 916 214 | 237 271 | 712 434 | |
| Impact of a 1% increase | - 772 | - 1 575 | 6 252 | |||
| Accumulated impact | - 772 | - 2 347 | 3 905 | |||
| Accumulated effect | 3 905 | |||||
| Net interest income | 124 148 | |||||
| Accumulated gap | 3.15% |
Liquidity risk is controlled in order to ensure that the institution will have liquid funds to meet its payment obligations at all times. The Bank is exposed to daily requests of cash available in current accounts, loans and guarantees, margin account needs and other needs related to cash equivalents.
The Bank does not have cash to meet all these needs, since its experience reveals that the proportion of funds that will be reinvested on the maturity date may be forecast with a high degree of certainty. Management policy defines limits for the minimum proportion of available funds to meet requests and for the minimum level of interbank facilities and other loans that have to be available to cover withdrawals and unexpected demand levels.
The liquidity management process, as performed by the Bank, includes:
Monitoring and reporting assume the form of cash flow measurement and projection reports for the following day, week and month, since these are important time brackets in terms of liquidity management. The starting point for these projections is an analysis of the contractual maturity of financial liabilities and the expected date for asset cash flows. The cash flow also monitors the degree of non-utilized loan commitments, the use of overdraft facilities and the impact of contingent liabilities such as letters of credit and guarantees.
Regarding the analysis of liquidity risk, besides the obligations established by the Bank of Portugal under the terms of Instruction No. 13/2009, the Bank also resorts to the concept of liquidity gap, i.e., from the balance sheet of the Bank as at 30 June 2014, based on the maturities of assets and liabilities it is possible to ascertain the ratio between the referred to maturities (positive or negative) according to residual maturity deadlines called liquidity gaps.
The table below presents the Bank's balance sheet (without accrued interest) at the end of June 2014 with the main classes grouped by maturity date:
| Up to 1 month | 1 to 3 months |
3 to 12 months |
1 to 5 years |
Over 5 years |
|
|---|---|---|---|---|---|
| Cash and balances w ith central banks |
50 712 | - | - | - | - |
| Deposits w ith banks |
66 622 | - | - | - | - |
| Financial assets held for trading | 1 134 | 4 | 73 660 | 12 237 | 15 070 |
| Available-for-sale financial assets | 5 898 | - | 102 169 | 1 088 378 | 673 470 |
| Loans and advances to banks | 184 765 | 1 272 | 1 073 424 | - | 1 100 |
| Loans and advances to customers | 735 164 | 442 815 | 990 991 | 1 339 923 | 1 823 589 |
| Other assets | 451 | 297 | 22 850 | 203 566 | 214 |
| Total Assets | 1 044 746 | 444 388 | 2 263 094 | 2 644 104 | 2 513 443 |
| Deposits from central banks | 400 000 | - | 895 000 | - | - |
| Financial liabilities held for trading | 3 800 | 12 | 4 713 | 18 025 | 50 313 |
| Deposits from banks | 1 561 246 | 338 176 | 311 279 | 118 750 | - |
| Due to customers | 1 205 845 | 511 571 | 1 598 670 | 645 288 | - |
| Debt securities issued | 5 093 | 5 426 | 575 000 | 123 614 | - |
| Current income tax liabilities | - | - | 528 | - | - |
| Other liabilities | 5 152 | 4 763 | 12 326 | 606 | 6 770 |
| Total Liabilities | 3 181 136 | 859 948 | 3 397 516 | 906 283 | 57 083 |
| Gap | -2 136 390 | - 415 560 | -1 134 422 | 1 737 821 | 2 456 360 |
| Accumulated gap | -2 136 390 | -2 551 950 | -3 686 372 | -1 948 551 | 507 809 |
| Liquidity gap as at 30 June 2013 | |||||
| Gap | -1 411 990 | - 772 852 | -1 155 280 | 1 178 716 | 2 464 842 |
| Accumulated gap | -1 411 990 | -2 184 842 | -3 340 122 | -2 161 406 | 303 436 |
Liquidity gap of the balance sheet as at 30 June 2014
As at 30 June 2014, maturities for the contracted amounts of off-balance sheet financial instruments that may commit the Bank to lending and other facilities to customers were as follows:
| 30-06-2014 | Up to 1 month | 1 to 3 months |
3 to 12 months |
1 to 5 years |
Over 5 years |
Undated |
|---|---|---|---|---|---|---|
| Contingent liabilities: | ||||||
| Documentary credits | - | - | - | - | - | 39 633 |
| Guarantees and Sureties | 645 | 8 448 | 10 551 | 200 278 | 2 047 | 307 046 |
| Commitments: | ||||||
| Irrevocable loans | - | - | - | - | - | - |
| Revocable loans | 72 347 | 60 882 | 309 929 | 95 131 | 38 034 | 251 830 |
| Total | 72 992 | 69 330 | 320 480 | 295 409 | 40 081 | 598 509 |
| 30-06-2013 | Up to 1 month | 1 to 3 months |
3 to 12 months |
1 to 5 years |
Over 5 years |
Undated |
|---|---|---|---|---|---|---|
| Contingent liabilities: Documentary credits Guarantees and Sureties |
- 4 106 |
- 9 265 |
- 7 921 |
- 164 427 |
- 44 975 |
45 400 329 143 |
| Commitments: Irrevocable loans Revocable loans |
- 30 296 |
- 44 938 |
- 201 248 |
- 20 388 |
- 102 128 |
- 263 389 |
| Total | 34 402 | 54 203 | 209 169 | 184 815 | 147 103 | 637 932 |
Banco Popular Portugal interprets Operational Risk as defined in the Basel II Accord, i.e., as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
The management process is based on an analysis by functional area listing the risks inherent in the specific functions and tasks of each body in the structure.
Involving the whole organization, the management model is ensured by the following structures:
Executive Committee (CE) – top management structure that is the main responsible for management guidelines and policies, establishing and monitoring risk appetite and risk tolerance limits.
Risk Management Department (DGR) – integrates the unit exclusively dedicated to managing operational risk. It is in charge of boosting and coordinating the remaining structures towards the application of methodologies and employment of corporate tools to support the model.
Heads of Operational Risk (RRO) – corresponding to the basis of the organization, these are elements appointed by the hierarchies of each organic unit who have the role of facilitators and promoters of the operational risk management model.
In the process of operational risk management, they also play a key role the auditing structures, internal control and security of the Bank.
The Bank provides custody services, guarantees, corporate management services, investment management and third party advisory services. These activities demand the allocation of assets and purchasing and sale transactions regarding a wide range of financial instruments. These assets, which are kept in fiduciary capacity are not included in these financial statements. As at 30 June 2014, the Bank held investment accounts in the amount of 7 815 939 thousand euros (2013: 4 583 404 thousand euros) and managed estimated financial assets in the amount of 139 386 thousand euros (2013: 118 488 thousand euros).
The main objective of capital management at the Bank is meeting the minimum requirements defined by supervisory entities in terms of capital adequacy and ensuring that the strategic objectives of the Bank in terms of capital adequacy are met.
The definition of the strategy to adopt in terms of capital management is in the scope of the Bank's Executive Board of Directors.
In prudential terms, the Bank is subject to the supervision of the Bank of Portugal, which issues the rules and regulations regarding this matter that guide the several institutions under their supervision. These rules and regulations determine a minimum ratio of total own funds in relation to the requirements demanded due to committed risks, that the institutions must abide by.
As at 30 June 2014, Core Tier 1 ratio, calculated pursuant to the rules issued by CRD IV/CRR for 2014, stood at 12.4%, which was highly above the minimum regulatory amount of 8%.
| 30-06-14 |
|---|
| 718,366 |
| 718,366 |
| 748,990 |
| 5,811,538 |
| 12.4% |
| 12.4% |
| 12.9% |
The Bank makes estimates and assumptions with impact on the reported amount of assets and liabilities in the following year. These estimates and assumptions are continuously assessed and conceived based on historical data and other factors, such as expectations regarding future events.
Every month, the Bank assesses its securities portfolio to evaluate potential impairment losses. In determining whether an impairment loss should be recorded in the income statement, the Bank analyses observable data that may be indicative of a measurable decrease in estimated cash flows both of the trading book and of specific individual cases within a trading book. This analysis may indicate, for example, an adverse event in the capacity of a customer to pay a loan or the worsening of macroeconomic conditions and related indicators. Management uses estimates based on historical data available for assets with similar credit risk and possible impairment losses. The methodology and assumptions used to calculate these estimates are revised regularly aiming at reducing any differences between estimated and actual losses.
The fair value of derivatives and unlisted financial assets was determined based on evaluation methods and financial theories whose results depend on the assumptions that have been used.
The Bank determines that there is impairment of equity investments of available-for-sale assets when there has been a significant or prolonged decline in the fair value below its cost. The needed quantification for the expressions 'significant' and 'prolonged' require professional judgement. When making this judgement, the Bank assesses among other factors the normal volatility of share prices. As a complement, impairment should be recognised when there are events that show the deterioration of the viability of the investment, the performance of the industry and the sector, technological changes and operational and financial cash flows.
Liabilities for retirement and survivor's pensions are estimated based on actuarial tables and assumptions on the growth of pensions and salaries. These assumptions are based on the Bank's expectations for the period when the liabilities are to be settled.
The recognition of a deferred tax asset assumes the existence of profit and a future tax base. Deferred tax assets and liabilities have been determined based on tax legislation currently in effect or on legislation already published for future application. Changes in the interpretation of tax legislation may influence the amount of deferred tax that has been recognised.
The Bank operates essentially in the financial sector and its activity is targeted at corporate, institutional and private customers.
The products and services offered by the Bank include deposits, loans to companies and private individuals, brokerage and custody services, investment banking services, and selling investment funds and life and non-life insurance. Additionally, the Bank makes short, medium, or long term investments in financial and foreign exchange markets in order to take advantage of price variations or as a means to make the most of available financial assets.
Banco Popular operates in the following segments:
(3) Other Segments, which groups all the operations not included in the other segments, namely operations and management of the Bank's Own Portfolio and Investments in Banks.
Geographically, Banco Popular operates exclusively in Portugal.
Segmental reporting is as follows:
| 30-06-2014 | Retail Banking |
Commercial Banking |
Other Segments |
Total |
|---|---|---|---|---|
| Interest and similar income Interest and similar charges |
60 924 38 113 |
41 313 9 483 |
31 244 23 811 |
133 481 71 407 |
| Return on equity instruments | - | - | 58 | 58 |
| Fees and commissions received Fees and commission paid |
16 486 983 |
6 579 225 |
11 103 3 141 |
34 168 4 349 |
| Income from Financial Operations (net) | 107 | - 551 | 9 209 | 8 765 |
| Gains from the sale of other assets | - | - | - 5 182 | - 5 182 |
| Other Operating Income (net) | - | - | - 3 214 | - 3 214 |
| Net assets | 3 371 364 | 2 073 031 | 3 888 377 | 9 332 772 |
| Liabilities | 3 174 576 | 1 227 865 | 4 217 897 | 8 620 338 |
| 30-06-2013 | Retail Commercial |
Other | Total | |
|---|---|---|---|---|
| Banking | Banking | Segments | ||
| Interest and similar income | 62 750 | 57 172 | 41 227 | 161 149 |
| Interest and similar charges | 42 650 | 21 499 | 32 837 | 96 986 |
| Return on equity instruments | - | - | 47 | 47 |
| Fees and commissions received | 12 270 | 5 137 | 11 674 | 29 081 |
| Fees and commission paid | - 382 | 74 | 4 691 | 4 383 |
| Income from Financial Operations (net) | 88 | - 20 | 2 438 | 2 506 |
| Gains from the sale of other assets | - | - | 2 614 | 2 614 |
| Other Operating Income (net) | - | - | - 3 138 | - 3 138 |
| Net assets | 3 364 096 | 2 437 002 | 3 779 939 | 9 581 037 |
| Liabilities | 2 630 853 | 1 647 400 | 4 623 078 | 8 901 331 |
This item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Interest and similar income from : | ||
| Cash and cash equivalents | 77 | 172 |
| Deposits w ith banks |
2 855 | 1 270 |
| Loans and advances to customers | 102 279 | 118 838 |
| Other financial assets at fair value | 117 | 669 |
| Other available-for-sale financial assets | 27 944 | 25 190 |
| Held-to-maturity investments | - | 14 921 |
| Other | 209 | 89 |
| 133 481 | 161 149 | |
| Interest and similar charges from: | ||
| Deposits from Central Banks | 1 531 | 5 361 |
| Deposits from banks | 7 547 | 6 375 |
| Due to customers | 40 362 | 58 015 |
| Debt securities issued | 10 580 | 16 034 |
| Hedging derivatives | 11 387 | 11 201 |
| 71 407 | 96 986 | |
| Net interest income | 62 074 | 64 163 |
Balance for this item is as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Available-for-sale financial assets | 58 | 47 |
| 58 | 47 |
These items are broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Revenue from Fees and Commissions from: | ||
| Loans | 6 776 | 8 310 |
| Guarantees and sureties | 3 486 | 3 671 |
| Means of collection and payment | 9 620 | 8 745 |
| Asset management | 2 339 | 1 752 |
| Insurance brokerage | 4 196 | 918 |
| Account maintenance | 2 918 | 2 538 |
| Processing fees | 791 | 821 |
| Structured operations | 1 470 | 913 |
| Other | 2 572 | 1 413 |
| 34 168 | 29 081 | |
| Expenses w ith Fees and Commissions from: |
||
| Means of collection and payment | 1 937 | 2 846 |
| Asset management | 1 159 | 1 234 |
| Insurance brokerage | 172 | 159 |
| Sale of repossessed properties | 810 | - |
| Other | 271 | 144 |
| 4 349 | 4 383 |
This item is broken down as follows:
| 30-06-2014 | 30-06-2013 | |||
|---|---|---|---|---|
| Gains | Losses | Gains | Losses | |
| Financial assets and liabilities held for trading | ||||
| Fixed income securities | - | - | - | - |
| Variable income securities | 128 | 1 120 | 214 | 430 |
| Derivative financial instruments | 14 366 | 14 793 | 27 403 | 26 463 |
| 14 494 | 15 913 | 27 617 | 26 893 | |
| Assets and liabilities at fair value through profit or loss | ||||
| Fixed income securities | - | 80 | 428 | 383 |
| 0 | 80 | 428 | 383 | |
| Hedging derivatives at fair value | 48 545 | 48 545 | 97 557 | 97 557 |
| Available-for-sale financial assets and liabilities | ||||
| Fixed income securities | 9 702 | - | 1 064 | - |
| 9 702 | 0 | 1 064 | 0 | |
| Financial liabilities at fair value | ||||
| through profit or loss | 72 741 | 64 538 | 126 666 | 124 833 |
During the first half of 2014, the Bank received 2.3 thousand euros in dividends from financial assets held for trading (2013: 22.5 thousand euros). In 2014 and 2013 the Bank did not earn any income from financial assets at fair value through profit or loss.
The effect seen in item Hedging derivatives at fair value results from fluctuations in the fair value of hedge instruments (interest rate swaps) and variations in the fair value of hedged assets, resulting from the hedged risk (interest rate). Since the hedging instrument is accounted for in the Available-for-sale financial assets portfolio, that variation in fair value is carried from Fair value revaluation reserve to the income statement.
These items are broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Exchange gains | ||
| Spot | 61 | 40 |
| Forw ard |
3 351 | 1 611 |
| 3 412 | 1 651 | |
| Exchange losses | ||
| Forw ard |
2 850 | 978 |
| 2 850 | 978 | |
| Income from exchange differences (net) | 562 | 673 |
This item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Gains from the sale of held-for-sale tangible assets | 637 | 401 |
| Gains from held-to-maturity investments | - | 5 065 |
| 637 | 5 466 | |
| Losses due to credit assignments | 563 | - |
| Losses from the sale of held-for-sale tangible assets | 5 256 | 2 852 |
| 5 819 | 2 852 | |
| - 5 182 | 2 614 |
This item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Contributions to the DGF | - 515 | - 583 |
| Contributions to the Resolution Fund | - 436 | - 83 |
| Other operating expenses | - 1 043 | - 1 352 |
| Other taxes | - 963 | - 1 235 |
| Contribution on the banking sector | - 2 005 | - 1 679 |
| Income from staff transfer | 607 | 832 |
| Income from property | 306 | 174 |
| Other income and operating revenue | 835 | 788 |
| - 3 214 | - 3 138 |
This item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Wages and salaries Obligatory social security charges from: |
21 088 | 20 844 |
| - Wages and salaries | 5 577 | 5 863 |
| - Pension Fund | 1 465 | 549 |
| - Other obligatory social security charges | 112 | 87 |
| Other expenses | 343 | 570 |
| 28 585 | 27 913 |
This item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| With supplies | ||
| Water, energy and fuel | 828 | 866 |
| Items of regular consumption | 166 | 207 |
| Softw are licences |
161 | 115 |
| Other third party supplies | 154 | 149 |
| With services | ||
| Rents and leasing | 2 175 | 2 249 |
| Communications | 2 222 | 2 033 |
| Travel, hotel and representation | 578 | 516 |
| Advertising and publications | 1 892 | 1 160 |
| Maintenance of premises and equipment | 1 709 | 2 024 |
| Transports | 560 | 522 |
| Fees and regular payment agreements | 3 228 | 3 202 |
| Legal expenses | 959 | 1 296 |
| IT Services | 6 414 | 3 881 |
| Security, surveillance and cleaning | 465 | 590 |
| Temporary w ork |
2 317 | 2 214 |
| External consultants and auditors | 337 | 347 |
| SIBS | 500 | 612 |
| External real estate appraisers | 54 | 147 |
| Services rendered by the parent company | 1 685 | 1 676 |
| Other third party services | 889 | 1 306 |
| 27 293 | 25 112 |
Income tax calculation for the first half of 2014 was made based on a nominal tax rate of 23% calculated over the tax base. In the first half of 2013, that rate was 25%. Both in 2014 and 2013, a municipal surcharge of 1.5% was applied to the nominal tax rate – levied on taxable income – as well as a state surcharge of 3% also levied on taxable income from 1.5 to 10 million euros, and of 5% on the remaining amount.
As at 30 June 201a and 2013, tax expenses on net profit, as well as the tax burden, measured by the relation between income taxes and the profit for the year before those taxes may be summed up as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Current tax on profits | ||
| For the year | 614 | 1 911 |
| Adjustments in respect of prior years | - 27 | - 1 693 |
| 587 | 218 | |
| Deferred taxes | ||
| Origination and reversal of temporary differences | - 513 | 1 067 |
| Total tax in the income statement | 74 | 1 285 |
| Net income before tax | 1 276 | 3 334 |
| Tax burden | 5.8% | 38.5% |
The reconciliation between the nominal tax rate and the tax burden for the first half of 2014 and 2013, as well as the reconciliation between tax expense/income and the product of accounting profit multiplied by the nominal tax rate, after deferred tax, is analysed as follows:
| 30-06-14 | 30-06-13 | |||
|---|---|---|---|---|
| Tax rate | Amount | Tax rate | Amount | |
| Net income before tax | 1 276 | 3 334 | ||
| Tax at nominal rate | 23.0% | 293 | 25.0% | 834 |
| Municipal surcharge after deferred tax | 4.0% | 51 | 6.5% | 218 |
| Autonomous taxation | 24.5% | 313 | 5.9% | 197 |
| Tax benefits | -9.3% | - 119 | -4.0% | - 132 |
| Effect of provisions not acceptable as costs | -111.3% | - 1 420 | 3.1% | 102 |
| Other net value adjustments | 115.4% | 1 473 | 40.2% | 1 339 |
| Contribution on the banking sector | 36.1% | 461 | 12.6% | 420 |
| Tax from previous years | -76.6% | - 978 | -50.8% | - 1 693 |
| 5.8% | 74 | 38.5% | 1 285 |
For additional information on deferred tax assets and liabilities see note 28.
Classification of financial assets and liabilities in accordance with IAS 39 categories has the following structure:
| 30-06-2014 | Booked at fair value | Accounts | Available-for-sale | Non-fin. | ||
|---|---|---|---|---|---|---|
| Traded | Fair value | receivable | Financial Assets | Assets | Total | |
| Assets | ||||||
| Cash and balances w ith central banks |
50 712 | 50 712 | ||||
| Deposits w ith other banks |
66 622 | 66 622 | ||||
| Financial assets held for trading | 103 903 | 103 903 | ||||
| Other fin. assets at fair value thr. prof./loss | 0 | |||||
| Available-for-sale financial assets | 1 869 916 | 1 869 916 | ||||
| Loans and advances to banks | 1 260 684 | 1 260 684 | ||||
| Loans and advances to customers | 5 353 776 | 5 353 776 | ||||
| Non-current assets held for sale | 20 747 | 20 747 | ||||
| Other assets | 227 498 | 216,959 | 444 457 | |||
| 103 903 | 0 | 6 959 292 | 1 890 663 | 216 959 | 9 170 817 |
| 30-06-2014 | Booked at fair value | Other Financial | Hedging | Non-financial | |
|---|---|---|---|---|---|
| Traded | Liabilities | Derivatives | Liabilities | Total | |
| Liabilities | |||||
| Deposits from central banks | 1 307 918 | 1 307 918 | |||
| Deposits from banks | 2 333 034 | 2 333 034 | |||
| Financial liabilities held for trading | 36 184 | 36 184 | |||
| Due to customers | 3 995 174 | 3 995 174 | |||
| Debt securities issued | 711 299 | 711 299 | |||
| Hedging derivatives | 119 294 | 119 294 | |||
| Other liabilities | 29 617 | 11 150 | 40 767 | ||
| 36 184 | 8 377 042 | 119 294 | 11 150 | 8 543 670 |
| 30-06-2013 | Booked at fair value | Accounts | Available-for-sale | Non-fin. | ||
|---|---|---|---|---|---|---|
| Traded | Fair value | receivable | Financial Assets | Assets | Total | |
| Assets | ||||||
| Cash and balances w ith central banks |
52 219 | 52 219 | ||||
| Deposits w ith other banks |
68 853 | 68 853 | ||||
| Financial assets held for trading | 55 107 | 55 107 | ||||
| Other fin. assets at fair value thr. prof./loss | 32 320 | 32 320 | ||||
| Available-for-sale financial assets | 2 256 879 | 2 256 879 | ||||
| Loans and advances to banks | 677 770 | 677 770 | ||||
| Loans and advances to customers | 5 693 052 | 5 693 052 | ||||
| Other assets | 197 635 | 363,883 | 561 518 | |||
| 55 107 | 32 320 | 6 689 529 | 2 256 879 | 363 883 | 9 397 718 |
| 30-06-2013 | Booked at fair value | Other Financial | Hedging | Non-financial | |
|---|---|---|---|---|---|
| Traded | Liabilities | Derivatives | Liabilities | Total | |
| Liabilities | |||||
| Deposits from central banks | 1 609 046 | 1 609 046 | |||
| Deposits from banks | 1 807 930 | 1 807 930 | |||
| Financial liabilities held for trading | 32 296 | 32 296 | |||
| Due to customers | 4 189 605 | 4 189 605 | |||
| Debt securities issued | 1 066 572 | 1 066 572 | |||
| Hedging derivatives | 89 064 | 89 064 | |||
| Other liabilities | 26 525 | 10 756 | 37 281 | ||
| 32 296 | 8 699 678 | 89 064 | 10 756 | 8 831 794 |
The balance of this item is broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Cash and cash equivalents | 39 176 | 41 348 |
| Demand accounts w ith the Bank of Portugal |
11 536 | 10 871 |
| 50 712 | 52 219 |
Deposits with Central Banks include mandatory deposits with the Bank of Portugal intended to meet legal minimum cash requirements.
Balance for this item is as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Deposits w ith banks in Portugal |
||
| Demand accounts | 725 | 368 |
| Cheques payable | 23 901 | 6 893 |
| Other deposits | 2 145 | 687 |
| 26 771 | 7 948 | |
| Deposits w ith banks abroad |
||
| Demand accounts | 38 605 | 58 696 |
| Cheques payable | 1 246 | 2 209 |
| 39 851 | 60 905 | |
| 66 622 | 68 853 |
Cheques payable from Portuguese and foreign banks were sent for settlement on the first working day after the reference dates.
The Bank uses the following derivatives:
Currency forward represents a contract between two parties for the exchange of currencies at a determined exchange rate established at the moment of the accomplishment of the contract (forward) for a determined future date. These operations have the purpose of hedging and managing currency risk, through the elimination of the uncertainty of the future value of certain exchange rate, which is immediately fixed by the forward operation.
Interest rate swap, which in conceptual terms can be seen as an agreement between two parties who compromise to exchange (swap) between them, for a specified amount and period of time, periodic payments of fixed rate for floating rate payments. It involves a single currency and consists in the exchange of fixed cash flows for variable ones or vice versa. This kind of instrument is aimed at hedging and managing the interest rate risk, regarding the income of a financial asset or the cost of a loan that a given entity intends to take in a determined future moment.
The fair value of derivative instruments held for trading is set out in the following table:
| 30-Jun-2013 | |||
|---|---|---|---|
| Contract value | Fair value | ||
| (Notional amount) | Assets | Liabilities | |
| Trading derivatives | |||
| a) Foreign currency derivatives | |||
| Currency forw ards |
5 989 | 34 | 23 |
| b) Interest rate derivatives | |||
| Interest rate sw aps |
425 671 | 31 598 | 32 190 |
| Options | 59 782 | 82 | 83 |
| Total derivatives held for trading (assets/liabilities) | 31 714 | 32 296 |
As at 30 June 2014, the fair value of other financial assets and liabilities held for trading was as follows:
| Other financial assets Variable income securities |
30-jun-2014 | 30-jun-2013 |
|---|---|---|
| Equity stakes | 71 315 71 315 |
23 393 23 393 |
| Total | 71 315 | 23 393 |
| Total financial assets held for trading Total financial liabilities held for trading |
103 903 36 184 |
55 107 32 296 |
Set out below is a breakdown of these items:
| Assets | 30-06-14 | 30-06-13 |
|---|---|---|
| Fixed income securities | ||
| Portuguese government bonds | - | 7 625 |
| Other foreign debt securities | - | 24 695 |
| 0 | 32 320 |
The item 'Other foreign debt securities' refers to mortgage bonds issued by Grupo Popular Español.
Public debt securities, as well as mortgage bonds, are managed, and their performance is assessed, taking into consideration their fair value and in accordance with risk strategies and policies, and the information on those items is reported to the Board on that basis.
The Bank does not hold financial liabilities at fair value through profit or loss.
As at 30 June 2014, the Bank had no unlisted equity instruments classified as available-forsale financial assets, which, since their fair value cannot be reliably measured, were recognised as costs (2013: 0 thousand euros).
30-06-14 30-06-13 Securities issued by residents Government bonds - at fair value 13 361 569 588 Other debt securities - at fair value 33 791 53 243 Equity securities - at fair value 653 612 47 805 623 443 Securities issued by non-residents Government bonds - at fair value 617 652 1 010 435 Other debt securities - at fair value 1 204 396 622 936 Equity securities - at fair value - 66 Other securities 63 - 1 822 111 1 633 437 Total 1 869 916 2 256 880
The balance of this item is broken down as follows:
The Bank has in its available-for-sale financial assets portfolio an investment of 1 785 thousand euros regarding subordinate bonds (Class D Notes) purchased in June 2002 associated with the securitisation of home loans, in the amount of 250 million euros named Navigator Mortgage Finance No. 1.
In the scope of that securitisation operation, assets were acquired by a loan securitisation fund named Navigator Mortgage Finance No. 1, which simultaneously issued securitisation units fully subscribed by Navigator Mortgage Finance No. 1 Plc, which also issued bonds with the following characteristics:
| Nominal amount | Rating | Interest rate | ||
|---|---|---|---|---|
| thousand euros | Standard & Poors |
Moody's | (until May 2035) | |
| Class A Notes (Senior) | 230 000 | AAA | Aaa | 3-month Euribor + 0.21% |
| Class B Notes (Senior) | 10 000 | A A |
Aa2 | 3-month Euribor + 0.38% |
| Class C Notes (Senior) | 10 000 | A | A 2 |
3-month Euribor + 0.55% |
| Class D Notes (Subordinate) | 4 630 | n.a. | n.a. | n.a. |
Under the terms of the agreement that was signed the Bank did not assume any commitment regarding cash availabilities of the issuer, as well as liquidity lines, credits, guarantees, rights and residual profits, or any other risks, besides the Class D Notes.
Intervening entities:
The most relevant financial data extracted from Navigator's unaudited financial statements are as follows:
| 30-06-14 | |
|---|---|
| Net assets | 56 675 |
| Liabilities | 62 312 |
| Equity | -5 637 |
| Income for the year | - 297 |
The nature of loans and advances to banks is as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Loans and advances to banks in Portugal | ||
| Time deposits | 45 | 3 173 |
| Loans | 10 121 | 10 000 |
| Other | 77 510 | 93 399 |
| Interest receivable | 91 | 98 |
| 87 767 | 106 670 | |
| Loans and advances to banks abroad | ||
| Time deposits | 176 805 | 292 455 |
| Reverse repurchase agreements | 995 832 | 277 996 |
| Other | 248 | 557 |
| Interest receivable | 32 | 92 |
| 1 172 917 | 571 100 | |
| 1 260 684 | 677 770 |
Set out below is a breakdown of loans and advances to banks by period to maturity:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Up to 3 months | 186 037 | 676 429 |
| From 3 months to 1 year | 1 073 424 | - |
| Over 5 years | 1 100 | 1 151 |
| Interest receivable | 123 | 190 |
| 1 260 684 | 677 770 |
Loans are granted via loan agreements, including overdraft facilities in demand accounts, and by the discount of effects. Total amounts of loans and advances to customers in the balance sheet, by nature, is as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Internal credit operations | ||
| Public sector | 3 077 105 | 3 430 120 |
| Private individuals | 1 852 836 | 1 855 077 |
| Home loans | 1 459 107 | 1 446 928 |
| Personal and consumer loans | 41 417 | 50 002 |
| Other personal lending | 352 312 | 358 147 |
| 4 929 941 | 5 285 197 | |
| External credit operations | ||
| Public sector | 31 621 | 53 302 |
| Private individuals | 20 522 | 18 949 |
| Home loans | 16 121 | 15 628 |
| Personal and consumer loans | 44 | 49 |
| Other personal lending | 4 357 | 3 272 |
| 52 143 | 72 251 | |
| Other loans (represented by securities) | 350 398 | 272 300 |
| Interest and commissions receivable | 7 836 | 24 168 |
| Past-due loans and interest | ||
| Due w ithin 90 days |
23 522 | 23 963 |
| Over 90 days | 285 113 | 226 886 |
| 308 635 | 250 849 | |
| Gross Total | 5 648 953 | 5 904 765 |
| Minus: | ||
| Provision for doubtful loans | 82 165 | 63 970 |
| Provision for past-due loans and interest | 213 012 | 147 728 |
| Provision for country risk | - | 15 |
| 295 177 | 211 713 | |
| Net total | 5 353 776 | 5 693 052 |
As at 30 June 2014, credit operations included 866 152 thousand euros in mortgage loans assigned to the issuance of mortgage bonds (2013: 867 064 thousand de euros) (note 33).
Set out below is a breakdown of loans and advances to customers by period to maturity:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Up to 3 months | 1 177 979 | 1 202 470 |
| 3 months to 1 year | 990 991 | 972 739 |
| 1 to 5 years | 1 339 923 | 1 511 423 |
| Over 5 years | 1 823 589 | 1 943 116 |
| Undetermined maturity (past due) | 308 635 | 250 849 |
| Interest and commissions receivable | 7 836 | 24 168 |
| 5 648 953 | 5 904 765 |
During 2013, the Bank carried out four credit assignments to the company Consulteam (a subsidiary of BPE in which the Bank has no stake), in the total gross amount of 166.5 million euros for the total amount of 152.8 million euros. These operations had an overall negative result of 2.6 million euros
Still during 2013, the Bank carried out four more credit assignments to Banco Popular Español in the total gross amount of 411.8 million euros for the total amount of 396.4 million euros. These operations had a positive income in the amount of 0.4 million euros due to the cancelling of already constituted provisions
During the first half of 2014, the Bank carried out a credit assignment operation to Banco Popular Español in the total gross amount of 8.06 million euros for the total amount of 7.50 million euros. These operations had an overall negative result of 0.56 million euros
The balance of the provision account for specific credit risks is detailed in the following table:
| 30-06-2014 | 30-06-2013 | |
|---|---|---|
| Balance as at 1 January | 260 893 | 185 144 |
| Appropriations | 120 608 | 114 230 |
| Used | 4 506 | 7 205 |
| Cancelled | 81 818 | 80 456 |
| Balance as at 30 June | 295 177 | 211 713 |
| Appropriations for provisions | 120 608 | 114 230 |
| Write-offs | - 81 818 | - 80 456 |
| Loan recoveries | - 2 924 | - 1 590 |
| Provisions net of w rite-offs and recoveries of bad debts |
35 866 | 32 184 |
In June 2013, the Bank sold 210 million of Spanish debt securities which were classified as held-to-maturity investments. Due to this sale, and pursuant to IAS 39, at the end of June, the Bank reclassified the remaining portfolio as available for sale without going through the profit or loss account.
Still pursuant to IAS 39, the Bank may only hold held-to-maturity instruments in 2016.
As at 30 June 2014, the Bank only held an equity stake in the associate company Eurovida – Companhia de Seguros de Vida, S.A., booked for 20 747 thousand euros (2013: 22 579 thousand euros).
The most important financial data extracted from the consolidated financial statements of Eurovida, prepared according to the IFRS, as well as the impact of the equity method of accounting, were as follows, as at 30 June 2014.
| Financial consolidated results for | Impact of the application | ||||
|---|---|---|---|---|---|
| Eurovida as at 30-06-2014 | of the equity method | ||||
| Effective | Net | Ow ner's |
Net | On consolidation | On net |
| stake (%) | Assets | equity | profit | reserves | income |
| 15.9348% | 975 940 | 99 746 | 7 948 | -7 951 | 1 266 |
This item is broken down as follows:
| 30-06-2014 | 30-06-2013 | |||||
|---|---|---|---|---|---|---|
| Art and | Construction | |||||
| Real estate | Equipment | antiques | in progress | Total | Total | |
| Balance as at 01 January | ||||||
| Acquisition costs | 128 018 | 50 529 | 149 | 0 | 178 696 | 181,394 |
| Accumulated depreciation | - 41 582 | - 48 138 | 0 | - 89 720 | -86,794 | |
| Accumulated impairment | - 6 595 | 0 | - 6 595 | -6,595 | ||
| Acquisitions | 351 | 351 | 68 | |||
| Transfers | ||||||
| Acquisition costs | - 1 428 | - 1 428 | - 752 | |||
| Accumulated depreciation | 458 | 458 | 752 | |||
| Disposals / Write-offs | ||||||
| Acquisition costs | - 39 | - 39 | - 1 043 | |||
| Accumulated depreciation | 39 | 39 | 722 | |||
| Depreciation for the year | - 1 221 | - 721 | - 1 942 | -2,428 | ||
| Balance as at 30 June | ||||||
| Acquisition costs | 126 590 | 50 841 | 149 | 0 | 177 580 | 179,667 |
| Accumulated depreciation | - 42 345 | - 48 820 | 0 | - 91 165 | -87,748 | |
| Accumulated impairment | - 6 595 | - 6 595 | -6,595 | |||
| Net amount | 77 650 | 2 021 | 149 | 0 | 79 820 | 85,324 |
This item is broken down as follows:
| 30-06-2014 | 30-06-2013 | |||
|---|---|---|---|---|
| Softw are |
Diverse | Total | Total | |
| Balance as at 01 January | ||||
| Acquisition costs | 18 735 | 2 097 | 20 832 | 20 707 |
| Accumulated depreciation | - 18 578 | - 2 082 | - 20 660 | - 20 536 |
| Acquisitions | 0 | 87 | ||
| Transfers | ||||
| Acquisition costs | 0 | 0 | ||
| Depreciation for the year | - 55 | - 6 | - 61 | - 56 |
| Balance as at 30 June | ||||
| Acquisition costs | 18 735 | 2 097 | 20 832 | 20 794 |
| Accumulated depreciation | - 18 633 | - 2 088 | - 20 721 | - 20 592 |
| Net amount | 102 | 9 | 111 | 202 |
Deferred taxes are calculated in respect of all the temporary differences using an effective tax rate of 24.5%, except those regarding tax loss for which a 23% rate was used.
Balances for these items are as follows:
| Balance as at | Equity | Reserves | Balance as at | |||
|---|---|---|---|---|---|---|
| 31-12-13 | Expense | Income | Increase | Decrease | 30-06-14 | |
| Deferred Tax Assets | ||||||
| Available-for-sale securities | 22 227 | 5 892 | 103 | 28 016 | ||
| Intangible assets | 3 444 | 1 238 | 2 206 | |||
| Taxable provisions | 19 235 | 2 804 | 3 945 | 20 376 | ||
| Fees and commissions | 162 | 4 | 158 | |||
| Seniority bonus | 994 | 38 | 1 032 | |||
| RGC provisions | 12 051 | 195 | 12 246 | |||
| Other assets/liabilities | 7 389 | 4 | 7 385 | |||
| Tax loss | 6 674 | 2 525 | 2 890 | 7 039 | ||
| 72 176 | 6 575 | 7 068 | 5 892 | 103 | 78 458 | |
| Deferred Tax Liabilities | ||||||
| Available-for-sale securities | 3 881 | 1 424 | 22 132 | 24 589 | ||
| Retirement pensions | 0 | |||||
| Property reappraisal | 179 | 19 | 160 | |||
| Shareholdings | 0 | |||||
| 4 060 | 0 | 19 | 1 424 | 22 132 | 24 749 |
This item is detailed as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Recoverable government subsidies | 79 | 395 |
| Taxes recoverable | 18 131 | 15 267 |
| Pledge accounts | 159 012 | 121 333 |
| Other debtors | 49 528 | 60 311 |
| Other income receivable | 623 | 1 077 |
| Expenses w ith deferred charges |
9 292 | 9 607 |
| Asset operations pending settlement - Diverse | 24 996 | 12 868 |
| Assets acquired in exchange for loans | 208 971 | 362 175 |
| Other tangible assets held for sale | 5 321 | 8 779 |
| Pension liabilities | - | 13 210 |
| Other transactions pending settlement | 8 465 | 11 028 |
| 484 418 | 616 050 | |
| Assets acquired in exchange for loans | - 36 157 | - 49 619 |
| Impairment of other tangible assets held for sale | - 2 930 | - 4 039 |
| Provisions for other assets | - 874 | - 874 |
| 444 457 | 561 518 |
Balances and movements in the accounts of 'Provisions for other assets' are as follows:
| Provisions for other assets | 30-06-14 | 30-06-13 |
|---|---|---|
| Balance as at 1 January | 874 | 859 |
| Appropriations | - | 15 |
| Used | - | - |
| Cancelled | - | - |
| Balance as at 30 June | 874 | 874 |
Movements in the account 'Assets acquired in exchange for loans' in 2014 and 2013 were as follows:
| 30-06-2014 | ||||||
|---|---|---|---|---|---|---|
| Available | Properties | |||||
| for-sale | not held for | Equipment | Total | Total | ||
| properties | sale | |||||
| Balance as at 01 January | ||||||
| Gross amount | 282 172 | 3 508 | 778 | 286 458 | 369 100 | |
| Accumulated impairment | - 48 232 | - | - 110 | - 48 342 | - 53 598 | |
| Net result | 233 940 | 3 508 | 668 | 238 116 | 315 502 | |
| Additions | ||||||
| Acquisitions | 33 192 | 996 | 162 | 34 350 | 48 517 | |
| Other | 167 | - | - | 167 | 1 173 | |
| Disposals | ||||||
| Gross amount | - 111 457 | - | - 290 | - 111 747 | - 56 615 | |
| Transfers | 678 | - 935 | - | - 257 | 0 | |
| Impairment losses | - 1 006 | - | - 17 | - 1 023 | - 2 778 | |
| Used | 8 531 | - | 44 | 8 575 | 4 862 | |
| Reversed | 4 615 | - | 18 | 4 633 | 1 895 | |
| Balance as at 30 June | ||||||
| Gross amount | 204 752 | 3 569 | 650 | 208 971 | 362 175 | |
| Accumulated impairment | - 36 092 | 0 | - 65 | - 36 157 | - 49 619 | |
| Net result | 168 660 | 3 569 | 585 | 172 814 | 312 556 |
This item is detailed as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Deposits from central banks | ||
| Deposits | 1 295 000 | 1 595 000 |
| Interest payable | 12 918 | 14 046 |
| 1 307 918 | 1 609 046 |
In terms of residual maturity, these funds are broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Forw ard |
||
| Up to 3 months | 400 000 | 400 000 |
| 3 months to 1 year | 895 000 | - |
| 1 to 5 years | - | 1 195 000 |
| Interest payable | 12 918 | 14 046 |
| 1 307 918 | 1 609 046 |
The balance of this item, spot and forward, is composed as follows in terms of nature:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Domestic credit institutions | ||
| Deposits | 487 115 | 152 072 |
| Interest payable | 3 407 | 1 334 |
| 490 522 | 153 406 | |
| International credit institutions | ||
| Loans | 118 750 | 125 000 |
| Deposits | 381 469 | 509 123 |
| Repurchase agreement | 1 339 188 | 1 019 646 |
| Other funds | 2 929 | 503 |
| Interest payable | 176 | 252 |
| 1 842 512 | 1 654 524 | |
| 2 333 034 | 1 807 930 |
The item International banks – Deposits includes essentially deposits made by the shareholder BPE.
In terms of residual maturity, these funds are broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Spot | 5 248 | 8 007 |
| Forw ard |
||
| Up to 3 months | 1 894 174 | 1 598 930 |
| 3 months to 1 year | 311 279 | 74 407 |
| 1 to 5 years | 118 750 | 125 000 |
| Interest payable | 3 583 | 1 586 |
| 2 327 786 | 1 799 923 | |
| 2 333 034 | 1 807 930 |
The balance of this item is composed as follows in terms of nature:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Resident funds | ||
| Demand accounts | 842 219 | 690 478 |
| Time deposits | 3 051 820 | 3 328 047 |
| Savings accounts | 4 457 | 5 478 |
| Cheques payable | 12 158 | 12 023 |
| Other funds | 13 | 31 |
| 3 910 667 | 4 036 057 | |
| Non-resident funds | ||
| Demand accounts | 26 992 | 25 051 |
| Time deposits | 23 711 | 85 949 |
| Cheques payable | 4 | 1 |
| 50 707 | 111 001 | |
| Interest payable | 33 800 | 42 547 |
| 3 995 174 | 4 189 605 |
In terms of residual maturity, these funds are broken down as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Spot | 869 211 | 715 529 |
| Forw ard | ||
| Up to 3 months | 848 205 | 1 476 253 |
| 3 months to 1 year | 1 598 670 | 1687942 |
| 1 to 5 years | 645 288 | 267 334 |
| Interest payable | 33 800 | 42 547 |
| 3 125 963 | 3 474 076 | |
| 3995174 | 4 189 605 |
The balance of this item is broken down as follows:
| 30-06-14 | $30 - 06 - 13$ |
|---|---|
| 3749 | |
| 515 000 | 515 000 |
| 190 384 | 545 611 |
| 2 1 6 6 | 5961 |
| 711 299 | 1 066 572 |
During 2010, Banco Popular Portugal constituted a Mortgage Bond Issuance Programme whose maximum amount is 1 500 million euros. In the scope of this programme, the Bank made the first issuance of mortgage bonds in the amount of 130 million euros on 20 December 2010, the second issuance of mortgage bonds in the amount of 225 million euros on 30 June 2011, the third issuance of mortgage bonds in the amount of 160 million euros on 30 December 2011, and the fourth issuance of mortgage bonds in the amount of 300 million euros on 26 September. This last issuance was fully repurchased by the Bank.
These bonds are covered by a group of home loans and other assets that have been segregated as autonomous equity in the Bank's accounts, therefore grating special credit privileges to the holders of these securities over any other creditors. The conditions of the aforementioned issuances are in accordance with Decree-law No. 59/2006, and Notices Nos.5/2006, 6/2006, 7/2006 and 8/2006 and Instruction No. 13/2006 issued by the Bank of Portugal.
On 30 June 2014, the characteristics of these issuances were the following:
| Name | Nominal | Carrying | Issue | Reimbursement | Interest | Rating | |
|---|---|---|---|---|---|---|---|
| value | amount | date | date | frequency | Interest rate | DBRS | |
| BAPOP Obrgs hipotecárias 20/12/2013 | 130 000 | 130055 | 20-12-2010 | 20-12-2014 | Monthly | 1M Euribor+1.20% | BBB |
| BAPOP Obrgs hipotecárias 30/06/201 | 225 000 | 225 000 | 30-06-2011 | 30-06-2015 | Monthly | 1M Euribor+1.20% | BBB |
| BAPOP Obrgs hipotecárias 30/12/2014 | 160 000 | 160 000 | $30 - 12 - 2011$ | $30 - 12 - 2014$ | Monthly | 1M Euribor+1.20% | BBB |
| BAPOP Obrgs hipotecárias 26/09/201 | 300 000 | 26-09-2012 | 26-09-2015 | Monthly | 1M Euribor+1.20% | BBB |
We should also note that the Bank made the first and second issuances of mortgage bonds under the 'extended maturity date' option, extending the maturity dates to December 2014 and June 2015.
On 30 June 2014, autonomous equity assigned to these issuances amounted to 867 979 thousand euros (2013: 872 059 thousand de euros) (see note 23).
During 2011, Banco Popular Portugal constituted a Mortgage Bond Issuance Programme whose maximum amount is 2.5 billion euros. In the scope of this programme, the Bank has already carried out 36 issuances and as at 30 June 2014, its balance was broken down as follows:
| Issue date | Serial | Amount | Number | Nominal | Reimbursement |
|---|---|---|---|---|---|
| number | unit value | date | |||
| 29-12-2011 | 1st | 50 000 | 500 | 100 000 | 29-12-2014 |
| 20-04-2012 | 2nd | 10 000 | 100 | 100 000 | 24-04-2015 |
| 17-09-2012 | 4th | 4 060 | 4 060 | 1 000 | 17-09-2014 |
| 26-10-2012 | 10th | 20 000 | 200 | 100 000 | 26-10-2016 |
| 26-02-2013 | 18th | 6 676 | 6 676 | 1 000 | 26-02-2016 |
| 26-03-2013 | 21st | 6 530 | 6 530 | 1 000 | 26-03-2016 |
| 12-04-2013 | 22nd | 5 093 | 5 093 | 1 000 | 12-07-2014 |
| 30-04-2013 | 23rd | 4 984 | 4 984 | 1 000 | 30-04-2016 |
| 28-05-2013 | 24th | 5 692 | 5 692 | 1 000 | 28-05-2016 |
| 25-06-2013 | 25th | 5 738 | 5 738 | 1 000 | 25-06-2016 |
| 30-07-2013 | 26th | 4 586 | 4 586 | 1 000 | 30-07-2016 |
| 27-08-2013 | 27th | 1 834 | 1 834 | 1 000 | 27-08-2016 |
| 13-09-2013 | 29th | 40 000 | 4 000 | 10 000 | 13-09-2015 |
| 19-09-2013 | 28th | 2 275 | 2 275 | 1 000 | 19-09-2015 |
| 30-09-2013 | 30th | 4 475 | 4 475 | 1 000 | 30-09-2017 |
| 21-10-2013 | 32th | 2 664 | 2 664 | 1 000 | 21-10-2015 |
| 30-10-2013 | 31st | 4 650 | 4 650 | 1 000 | 30-10-2017 |
| 29-11-2013 | 33rd | 2 660 | 2 660 | 1 000 | 29-11-2017 |
| 30-12-2013 | 34th | 1 300 | 1 300 | 1 000 | 30-06-2017 |
| 10-01-2014 | 36th | 6 518 | 6 518 | 1 000 | 10-01-2017 |
| 23-01-2014 | 35th | 649 | 649 | 1 000 | 23-01-2017 |
| 190 384 |
The item 'Hedging derivatives' is composed as follows:
| 30-06-2014 | 30-06-2013 | |||
|---|---|---|---|---|
| Notional Amount |
Liabilities | Notional Amount |
Liabilities | |
| Interest rate contracts | ||||
| Sw aps |
978 000 | 119 294 | 696 250 | 89 064 |
| 119 294 | 89 064 |
As referred to previously, the Bank covers part of its interest rate risk, resulting from any possible decrease in the fair value of fixed interest rate assets, using interest rate swaps. On 30 June 2014, the net fair value of hedging and trading interest rate swaps (see above) was negative (see note 19) in the amount of -122 849 thousand euros (2013: -89 656 thousand euros).
Fluctuations in the fair value associated with hedged assets and their respective hedging derivatives are registered in the income statement under item 'Net income from financial operations' (see note 9).
Balances and movements in the Provisions account were as follows:
| Other Provisions (Liabilities) - Movements | 30-06-14 | 30-06-13 |
|---|---|---|
| Balance as at 1 January | 51 054 | 54 588 |
| Appropriations | 1 594 | 1 285 |
| Cancelled | 1 257 | 3 414 |
| Balance as at 30 June | 51 391 | 52 459 |
| Other Provisions (Liabilities) - Balances | 30-06-14 | 30-06-13 |
| Other provisions | 64 | 257 |
| Provisions for general credit risks | 49 350 | 49 575 |
| Other provisions | 1 977 | 2 627 |
| 51 391 | 52 459 |
This item is detailed as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Suppliers of goods | 1 797 | 4 113 |
| Tax w ithheld at source |
3 414 | 3 569 |
| Personnel expenses | 11 459 | 11 144 |
| Other expenses | 13 145 | 6 477 |
| Other revenues w ith deferred income |
2 616 | 1 855 |
| Debit instructions charged | - | 627 |
| Funding operations pending payment | 7 958 | 8 274 |
| Other accruals and deferred income | 378 | 1 222 |
| 40 767 | 37 281 |
The Pension Plan of Banco Popular Portugal is a scheme of benefits that comprehends all the benefits foreseen in the Collective Bargaining Agreement that regulates the banking sector in Portugal
The fund assumes the liabilities with past services of former employees in the proportion of their time of service. As a counterpart, from the amount of liabilities we deduct the amount of liabilities with past services of current employees as regards the time of service rendered in other institutions in the banking sector. These liabilities for services rendered are calculated pursuant to IAS 19 Revised.
The Pension Plan of the executive members of the Board of Directors intends to ensure payment for old age pensions, disability pensions and survivor's pensions for the executive members of the Bank's Board of Directors.
With the publication of Decree-law No.1-A/2011, of 3 January, the employees comprehended by the Collective Bargaining Agreement and in active life on 4 January 2011 started to be comprehended within the General Social Security Scheme ('Regime Geral da Segurança Social' - RGSS) as regards the benefits of old age pensions. Therefore, from that date on the benefits plan defined for employees comprehended in the Collective Bargaining Agreement as regards retirement pensions started to be funded by the Pension Fund and Social Security. However, the Pension Fund still has the responsibility, after 4 January 2011, to cover liabilities on death, disability and survivor's pensions, as well as the old age complement in order to match the retirement of the participants in the Pension Fund to the amounts of the current pension plan.
According to guidelines derived from the Note issued on 26 January 2011 by the National Council of Financial Supervisors, the Bank has kept with reference to 31 December 2010 the recognition and measurement method for past services of active employees regarding the events transferred to the RGSS used in previous years.
In accordance with Decree-law No.127/2011 of 31 December, Banco Popular Portugal transferred to Social Security the liabilities for pensions in payment on 31 December 2011, as well as the part of the assets contained in the pension fund that already covered such liabilities. The liabilities transferred amounted to 6.3 million euros and have already been fully paid (55% in December 2011 and 45% in March 2012).
This transference was recorded in the income statement in the amount of 795 thousand euros due to the allocation of the proportional part of accumulated actuarial deviations and the actuarial deviations originated by the difference in actuarial assumptions used for the calculation of the transferred liabilities. In accordance with Decree-law No. 127/2011 of 31 December, this amount shall be deductible for effects of determining taxable profit, in equal parts, from the fiscal year started on 1 January 2012, regarding the average of the number of years of life expectancy of the pensioners whose responsibilities have been transferred. The respective deferred taxes have been on the amount recognised in the year's net income.
Until 31 December 2012, the Bank recognized the net accumulated amount (after 1 January 2004) of actuarial gains and losses resulting from changes in the financial and actuarial assumptions and differences between the financial and actuarial assumptions used and the actual amounts in the item 'Other Assets or Other Liabilities – Actuarial deviations'. Accumulated actuarial gains or losses that did not exceed 10% of the highest of the current value of liabilities for past services or the value of the pension funds were included in the 'corridor'. Actuarial gains and losses in excess of the corridor were recognised against results over the average remaining period of service of the employees covered by the plan.
As at 1 January 2013 the Bank changed its accounting policy of recognising financial and actuarial gains and losses for pension plans and other defined benefit post-employment benefits (see 2.15 Employee Benefits) according to IAS 19 Revised. Financial and actuarial gains and losses are now recognised in the period they occur directly in equity in the Statement of Comprehensive Income.
On 30 June 2014, the number of participants in the fund was 1 139 (2013: 1 147). On this date, there were 39 retired people and 11 pensioners, and the remaining employees were active.
The liabilities assumed for retirement and survivor's pensions are as follows:
| Past Services | 30-06-14 | 30-06-13 |
|---|---|---|
| Defined benefit obligation at the beginning of the year | 128 411 | 108 961 |
| Service expenses: | ||
| Bank | 670 | 618 |
| Employees | 378 | 378 |
| Interest expense | 2 360 | 2 488 |
| Pensions paid | - 479 | - 431 |
| Actuarial deviations | 1 418 | - 1 564 |
| Balance as at 30 June | 132 758 | 110 450 |
Every year the Bank determines the amount of liabilities for past services using actuarial calculations based on the Project Unit Credit method for liabilities for past services in the case of old age and the Unique Successive Premium to calculate disability and survivor's benefits. The discount rate is determined based on market rates for high quality corporate bonds, with periods to maturity similar to those for settlement of pension liabilities.
Obligations for survival and disability, foreseen in the Collective Bargaining Agreement and insurable are covered by the subscription of a multi-protection life insurance policy for the population at stake, except for those whose urgency of disability or survival is considered unfit to insure.
This is an annual renewable temporary contract in which the Insurance company guarantees the Pension Fund of Banco Popular Portugal, S.A., in case of death or disability assessed at 66% or more according to the National Table for Disability, for any of the people comprehended within the insured group, the payment of the hired premiums.
This insurance contract was signed with Eurovida – Companhia de Seguros de Vida S.A., an insurance company that is an associate of Banco Popular Portugal, SA.
The movements occurred in the total amount of the pension fund were as follows:
| Total Fund Amount | 30-06-14 | 30-06-13 |
|---|---|---|
| Amount at the beginning of the year | 128 495 | 121 796 |
| Contributions paid | ||
| Employer | 1 500 | - |
| Employees | 378 | 378 |
| Return on Fund assets | 3 440 | 2 217 |
| Pensions paid | - 479 | - 431 |
| Other net differences | - 773 | - 300 |
| Amount of the Fund as at 30 June | 132 561 | 123 660 |
| Current obligations for past services | 132 758 | 110 450 |
| Coverage level | 99.9% | 112.0% |
The evolution of liabilities and the total amount of the pension fund in the past five years was as follows:
| 30-06-14 | 31-12-13 | 31-12-12 | 31-12-11 | 31-12-10 | |
|---|---|---|---|---|---|
| Current amount of liabilities | 132 758 | 128 411 | 108 961 | 94 708 | 102 746 |
| Total Fund Amount | 132 561 | 128 495 | 121 796 | 113 703 | 118 246 |
| (Net) Assets/Liabilities | - 197 | 84 | 12 835 | 18 995 | 15 500 |
| Coverage level | 99.9% | 100.1% | 111.8% | 120.1% | 115.1% |
Banco Popular Portugal assesses the recoverability of any eventual excess in the fair value of the assets included in the pension fund when compared with the liabilities for pensions at each reporting date based on the expectation of the reduction in the future necessary contributions.
On 30 June, The Pension Fund's portfolio broken down by asset type was as follows:
| TYPES OF ASSETS | 30-06-2014 | 31-12-2013 |
|---|---|---|
| Fixed income securities | 44.28% | 60.49% |
| Variable income securities | 45.55% | 33.49% |
| Real estate | 4.68% | 5.04% |
| Liquidity | 5.49% | 0.98% |
| 100.00% | 100.00% |
Regarding the credit risk of the assets with debt characteristics that comprise the fund, the exposure by rating had the following structure:
| Ratings | 30-06-2014 | 31-12-2013 |
|---|---|---|
| AAA | 0.74% | 5.35% |
| A A |
3.63% | 10.42% |
| A | 13.76% | 19.74% |
| BBB | 34.80% | 24.95% |
| Others (NR) | 47.07% | 39.54% |
| 100.00% | 100.00% |
As at 30 June 2014, the Fund had 50 Euro Medium Term Notes (1st Series) issued on 29 December 2011 by Banco Popular Portugal in the amount of 5 126 thousand euros. During the first half of 2014, these Euro Medium Term Notes had a negative change in fair value in the amount of 68 thousand euros.
The amounts recognised as costs for the year are analysed as follows:
| Costs for the period | 30-06-14 | 30-06-13 |
|---|---|---|
| Service Cost | 1 048 | 996 |
| Interest expense | 2 360 | 2 488 |
| Expected return on Fund assets | - 2 362 | - 2 776 |
| Other | 395 | - 182 |
| Total | 1 441 | 526 |
The main actuarial and financial assumptions used were as follows:
| 30-06-14 | 30-06-13 | ||||
|---|---|---|---|---|---|
| Assump. Real |
Assump. | Real | |||
| Discount rate | 3.63% | 3.63% | 4.50% | 4.50% | |
| Expected return of Fund assets | 3.63% | 2.68% | 4.50% | 1.82% | |
| Salaries and other benefits increase rate | 1.5% | 0.0% | 2.0% | 0.0% | |
| Pensions increase rate | 1.0% | 0.0% | 1.0% | 0.0% | |
| Mortality table | TV 88/90 | TV 88/90 | |||
| Disability table | ERC Frankona | ERC Frankona | |||
| Turnover | n.a. | n.a. | n.a. | n.a. |
Gains and losses arising from experience adjustments and changes in actuarial assumption are recognised in other comprehensive income in Retained Earnings in the period they occur.
Taking into consideration the most significant impacts on the amount of liabilities, we have performed a sensitivity analysis through a positive and negative fluctuation in the main assumptions that contribute to the amount of the liabilities, whose impact is analysed as follows:
| Impact on current liabilities | ||||
|---|---|---|---|---|
| Change | Increase in assumption |
Decrease in assumption |
||
| Discount rate | 0.25% | Decrease by 6.2% | Increase by 6.7% | |
| Salaries and other benefits increase rate | 0.25% | Increase by 5.1% | Decrease by 4.8% | |
| Pensions increase rate | 0.25% | Increase by 2.6% | Decrease by 2.5% | |
| Increase by 1 year |
Decrease by 1 year |
Average life expectancy Increase by 3.2% Decrease by 3.3%
The sensitivity analyses above are based on the change in a given assumption, keeping all other assumptions equal. In practice, that is very unlikely to occur given the correlations that exist between the several assumptions. When calculating the sensitivity of the amount of liabilities for significant actuarial assumptions we applied the same methods used to calculate the positions in the Balance Sheet.
The methodology used to perform the sensitivity analysis remained unchanged from the previous year.
The future undiscounted cash flows of pension benefits are as follows:
| Up to 1 year | 1 to 3 years | 3 to 5 years | Over 5 years | Total | |
|---|---|---|---|---|---|
| Benefiit (monthly) | 119 | 157 | 232 | 5 085 | 5 593 |
The following table shows the contractual amount of off-balance financial instruments, which imply lending to customers.
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Contingent liabilities | ||
| Guarantees and Sureties | 529 015 | 559 837 |
| Documentary credits | 39 633 | 45 400 |
| Commitments | ||
| Irrevocable loans | 833 134 | 763 543 |
| Revocable loans | 828 153 | 662 387 |
| 2 229 935 | 2 031 167 |
On 30 June 2014, the item Irrevocable loans included the amount of 5 314 thousand euros (2013: 5 314 thousand euros) regarding forward liabilities for the Deposit Guarantee Fund regarding the part of annual contributions which, pursuant to the deliberations of the Fund, were not paid in cash.
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Assets pledged as collateral | 1 744 700 | 3 179 265 |
The amount of the item 'Assets pledged as collateral' includes 1 744.7 thousand euros from the Bank's own portfolio aimed, almost entirely, at collateralising an irrevocable credit line with the Bank of Portugal pursuant to the large-amount payment system ('Sistema de Pagamentos de Grandes Transacções – SPGT') and the Intervention Operations Market ('Mercado de Operações de Intervenção' - MOI) (2013: 1 522.7 thousand euros).
Additionally, as at 30 June 2014 and 2013, the balances regarding off-balance sheet accounts were as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Deposit and custody of securities | 7 815 938 | 4 583 404 |
| Amounts received for collection | 92 189 | 95 738 |
| 7 908 127 | 4 679 142 |
As at 30 June 2014, the Bank's share capital was represented by 476 000 thousand shares with the nominal value of 1 euro each, which was subscribed and fully paid by Banco Popular Español, SA.
The amount recognised in item Share premiums originated in the premiums paid by shareholders in the share capital increases made in 2000, 2003 and 2005.
The movements in this account are detailed on the following table:
| Revaluation reserves and Fair Value | 30-06-14 | 30-06-13 |
|---|---|---|
| Available-for-sale investments | ||
| Net balance as at 1 January | - 56 434 | - 113 155 |
| Revaluation at fair value | 60 602 | 38 474 |
| Deferred taxes | - 14 918 | - 10 195 |
| Balance as at 30 June | - 10 750 | - 84 876 |
| Revaluation reserves ( Legal provisions ) | 1 990 | 2 291 |
| Balance as at 30 June | - 8 760 | - 82 585 |
Revaluation reserves regarding available-for-sale assets result from the adequacy to the fair value of the securities in the Bank's portfolio. These balances shall be reversed through the income statement at the time the securities that originated them are disposed of or in case there is any impairment.
The revaluation reserve regarding the adequacy to fair value of tangible assets for own use is related to the property on Rua Ramalho Ortigão (note 26).
The revaluation reserve for tangible assets calculated in accordance with Decree-law No. 31/98 shall only be moved when it is considered realized, total or partially, and pursuant to the following priorities:
The balances of the accounts for other reserves and retained earnings are analysed as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Statutory reserve | 35 221 | 35 221 |
| Other reserves | 289 328 | 289 027 |
| Retained earnings | - 90 666 | - 50 115 |
| 233 883 | 274 133 |
The movements in the items reserves and retained earnings were as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Statutory reserve | ||
| Balance as at 1 January | 35 221 | 34 951 |
| Transf. Retained earnings | 0 | 270 |
| Balance as at 30 June | 35 221 | 35 221 |
| Other reserves | ||
| Balance as at 1 January | 289 027 | 286 548 |
| Transf. Retained earnings | 0 | 2 422 |
| Transf. Revaluation reserves | 301 | 57 |
| Balance as at 30 June | 289 328 | 289 027 |
| Retained earnings | ||
| Balance as at 1 January | - 58 606 | - 51 119 |
| Net income for the previous year | - 31 720 | 2 692 |
| Diff. from changes in accounting princ. (IFRS) | - 340 | 1 004 |
| Legal reserve transf. | 0 | - 270 |
| Other reserves transf. | 0 | - 2 422 |
| Balance as at 30 June | - 90 666 | - 50 115 |
| 233 883 | 274 133 |
The legal reserve can only be used to absorb accumulated losses or to increase share capital. Portuguese legislation applicable to the banking sector (Article 97 of Decree-Law No. 298/92, 31 December) requires that 10% of the profit for the year be transferred to the legal reserve until it is equal to the share capital.
The number of employees of the Bank according to professional category was as follows:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Directors | 95 | 94 |
| Management | 453 | 457 |
| Technical personnel | 517 | 517 |
| Clerical staff | 232 | 237 |
| 1 297 | 1 305 |
The annual amounts earned by the members of the Board of Directors and the Supervisory Board are detailed, individually and in group, on the following table:
| Fixed Remun. |
Variable Remun. Cash |
Total Remun. |
|
|---|---|---|---|
| Board of Directors | |||
| Rui Manuel Morganho Semedo - Chairman | 195 | 100 | 295 |
| Carlos Manuel Sobral Cid da Costa Álvares | 139 | 113 | 252 |
| 334 | 213 | 547 | |
| Supervisory Board | |||
| Rui Manuel Ferreira de Oliveira - Chairman | 5 | 0 | 5 |
| António José Marques Centúrio Monzelo - Member | 3 | 0 | 3 |
| Telmo Francisco Salvador Vieira - Member | 3 | 0 | 3 |
| 11 | 0 | 11 |
The remunerations earned and the number of number of employees who have responsibilities in terms of risk taking regarding the Bank or its customers as well as those who assume control functions pursuant to Notice 5/2008 issued by the Bank of Portugal are detailed below:
| No. of Benef. |
Fixed Remun. |
Variable Cash Remun. |
Total Remun. |
|
|---|---|---|---|---|
| Executive Committee | 6 | 444 | 150 | 594 |
| Risk Management | 1 | 48 | 7 | 55 |
| Compliance | 1 | 32 | 4 | 36 |
| Asset Management | 1 | 44 | 7 | 51 |
| Auditing | 1 | 29 | 10 | 39 |
| 10 | 597 | 178 | 775 |
The amounts paid to the Audit Firm PricewaterhouseCoopers in the first half of 2014 and 2013 were:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Statutory audit | 74 | 76 |
| Other guarantee and reliability services | 47 | 108 |
| 121 | 184 |
As at 30 June 2014 and 2013, the amounts payable and receivable regarding related companies was as follows:
| Credit | Debit | Income | Expense | |||||
|---|---|---|---|---|---|---|---|---|
| 30-06-14 | 30-06-13 | 30-06-14 | 30-06-13 | 30-06-14 | 30-06-13 | 30-06-14 | 30-06-13 | |
| Eurovida, SA | 4 023 | 4 025 | 143 960 | 113 883 | 4 493 | 1 206 | 3 070 | 3 231 |
| Popular Gestão de Activos, SA | 157 | - | 2 164 | 1 890 | 939 | 677 | 3 | 1 |
| Popular Factoring, SA | 78 836 | 97 862 | - | - | 1 268 | 1 504 | 335 | 187 |
| Imopopular Fundo Especial I.I. | 7 927 | 12 703 | 19 | 208 | 152 | 162 | - | - |
| Popular Arrendamento | 8 | 3 | 47 120 | - | 49 | 13 | 223 | 3 |
| Popular Seguros, SA | - | - | 1 711 | 679 | 372 | 281 | - | 15 |
| Popular Predifundo | 1 475 | - | - | - | 38 | - | - | - |
| SPE-Special Pourpuse Entities | 1 879 | 2 699 | - | - | - | 948 | - | - |
| 94 305 | 117 292 | 194 974 | 116 660 | 7 311 | 4 791 | 3 631 | 3 437 | |
| Banco Popular Español, SA | 1 356 424 | 499 272 | 2 391 938 | 2 197 193 | 53 705 | 17 894 | 87 782 | 132 441 |
As at 30 June 2014, the guarantees pledged by the Bank to related companies amounted to 5 472 thousand euros (2013: 8 431 thousand euros).
As at 30 June 2014, the Bank received deposits from BPE to guarantee the risk associated with loans granted by the Bank in the amount of 103 526 thousand euros (2013: 172 491 thousand euros).
Transactions with related companies are based on common market conditions.
As at 30 June 2014, the members of the Bank's Board of Directors did not hold any deposits or loans with Banco Popular.
For effects of the cash flow statement, Cash and cash equivalents include the following balances with maturity inferior to 90 days:
| 30-06-14 | 30-06-13 | |
|---|---|---|
| Cash (note 17) | 39 177 | 41 348 |
| Cash and balances w ith banks (note 18) |
66 622 | 68 853 |
| Deposits w ith banks w ith maturities of less than 3 months |
186 037 | 398 433 |
| 291 836 | 508 634 |
The Bank is exposed to credit risk, which is the possible loss that arises when the Bank's counterparts fail to fulfil their obligations. In the case of refundable financing it arises as a consequence of the non-recovery of principal, interest and commissions, regarding amount, period and other conditions stipulated in the contracts. Concerning off-balance sheet risks, it derives from the non-compliance of the counterparts regarding their obligations with third parties, which implies that the Bank has to assume as its own certain obligations depending on the contracts.
The Bank structures the levels of credit risk it is exposed to by establishing pre-defined acceptable risk limits regarding the borrower or group of borrowers and geographical or business activity segments.
Exposure to credit risk is managed through a regular analysis of the capacity of borrowers and potential borrowers of meeting payment obligations for principal and interest, and by changing these credit limits when appropriate. Exposure to credit risk is also managed in part by obtaining collaterals and personal or corporate guarantees.
The Bank employs a series of policies and practices in order to mitigate credit risk. The most traditional one is securing collaterals at the moment funds are advanced. The Bank implements guidelines regarding the acceptability of specific classes of collaterals or mitigation of credit risk. The main types of collaterals for loans and receivables are the following:
Long term loans to corporate and private customers usually require a collateral; lower amounts and recurring personal loans generally require no collateral. Additionally, with the intention of minimising loss, at the time an impairment indicator for loans and receivables is identified the Bank tries to obtain additional collaterals from the relevant counterparts.
Collaterals held for financial assets, except for loans and advances, are determined by the nature of the instrument. Debt instruments, treasury bonds and other securities usually are not collateralised.
The main objective of these instruments is to ensure that funds are made available to customers as they require them. Loan extension commitments represent non-utilized parts of credit extension authorizations in the form of loans, guarantees or letters of credit. Regarding the credit risk associated with loan extension commitments, the Bank is potentially exposed to a loss in the amount of the total of non-utilized commitments. However, the probable loss amount is much lower than the sum of the non-utilized commitments since loan extension commitments are revocable and depend on a specific customer's credit worthiness. The Bank monitors the maturity of lending commitments since long term commitments usually present a greater credit risk than short term commitments.
The Risk Management Department manages and monitors concentration risk and ensures that adequate policies and procedures are maintained and implemented to monitor and manage credit concentration risk. It is also in charge of monitoring delegated powers in terms of concentration risk and periodically presents reports on concentration risk to the Board of Directors.
The Bank has defined a structure of limits aimed at maintaining an exposure level in line with its risk profile and an adequate diversification of its loan portfolio.
The limits currently approved for credit concentration risk are the following:
Pursuant to the delegations attributed by BAPOP to the Bank, the maximum limit for total exposure with a Group/Customer is 10% of GBP's Tier I. The maximum limit for a Group/Customer, except bank and technical guarantees and transactions guaranteed with deposits is 5% of GBP's Tier I.
The maximum amount for a lending transaction is defined.
In case of funding working capital or without a specific destination every risk with that characteristic shall be aggregated.
Regarding project finance and syndicated financing, the Bank's participation shall not be higher than 25% of the total amount, in case the transaction is higher than the limit defined for this type of lending.
The maximum limit for participation in the CRC with a Group/Customer shall be the following:
Group/Customer with risks of over € 500 million - Lower than 10% of CRC. Group/Customer with risks of over € 250 million - Lower than 15% of CRC. Group/Customer with risks of over € 100 million - Lower than 25% of CRC.
Group/Customer with risks of over € 20 million - Lower than 50% of CRC.
The maximum limits of concentration of total risk by activity sector are the following:
Remaining sectors: 10% (Agriculture, forestry and fisheries; Energy and water supply; Wholesale and retail trade, repair of motor vehicles; Hotels and restaurants; Transport and storage; Banking and insurance; Administrative, professional sanitary and artistic activities).
There is a maximum limit of 30% of total risk for the Large Companies segment.
There are also defined limits according to the type of product:
A set of limits is also defined according to the loan to value (LTV) of lending transactions with mortgage collaterals.
The loan write-off policy may only be applied when the loan dos not have any real collateral, when it is 100% provisioned and, simultaneously, when Management estimates that there will be no recovery arising from the fact that every due diligence has been taken to collect and recover said loan.
The analysis and subsequent determination of individual impairment of a customer that has shown impairment in previous periods may only result in a reversion in case it is related with the occurrence of an event after the initial recognition (e.g. improvement of the customer's rating or strengthening collaterals).
Additionally, there may be implicit reversions of impairment, resulting from new estimates of collective parameters or changes in the type of customer analysis (individual or collective).
The reversal amount may not be higher than the accumulated impairment amounts previously recorded.
The Bank does not usually employ this type of solution and solely holds an exposure on an economic group that was subject to this type of loan restructuring. In this case, the loan is replaced by a position comprised of shares from a Restructuring Fund.
These positions are subject to impairment tests every six months from the moment those shares are included in the Restructuring Fund. For junior debt positions maintained in companies held by these Funds a 100% impairment is estimated regarding their respective exposure.
The Bank has defined a vast set of restructuring measures, which are negotiated by a large set of Agencies specialising in credit recovery. The most common measures are extending the maturity date of the loan or the inclusion of a grace period.
In terms of characteristics, these restructuring operations are divided into large groups: without past-due loans (with or without collateral strengthening) and with past-due loans (with or without collateral strengthening).
The Bank's decision-making body in terms of loan granting shall identify the restructuring operations that result from customers' financial difficulties. These are subsequently classified by the Bank's computer system. Costumers with lending operations that are undergoing a restructuring process are also subject to an internal definition of a loan restrictive classification. Agencies are thus forced to act on this policy, which may imply maintaining, reducing or extinguishing risks.
Regarding monitoring in terms of the loan impairment model, these transactions shall bear the restructuring brand for a two-year healing period pursuant to Instruction No. 32/2013 issued by the Bank of Portugal.
For situations in which it is admissible that credit recovery shall occur via foreclosure the amounts that shall be considered (market value of the most recent appraisal known with the application of a temporal haircut) are also defined by internal regulations.
Reappraisals of these collaterals are usually done within the time frames defined by Notices Nos. 3/95 and 5/2006 issued by the Bank of Portugal. However, in the case of properties related with transactions done with customers with significant exposures (over 1 million euros), reappraisals are carried out more often.
Despite the pre-defined time frames, appraisals are carried out whenever they are considered relevant to monitor the value of the collateral.
The value of the properties considered as collaterals is adjusted to the current macroeconomic scenario through the application of haircuts, based on Management analysis and market practices.
| Haircut | ||
|---|---|---|
| Time frame of the assessment | >= 50% Work completed |
< 50% Work completed |
| Less than 6 months | 0% | 0% |
| 6 months | 5% | 5% |
| From 6 months to 1 year | 10% | 10% |
| From 1 to 2 years | 15% | 20% |
| From 2 to 3 years | 25% | 35% |
| Over 3 years | 50% | 60% |
Regarding financial collaterals and securities, we have defined the periodical monitoring of the lending operations collateralised with this type of assets, and these are regularly reported to Management. Assets used as collateral are indicated, as well as the overall hedging ratio. These amounts are considered in the scope of an individual impairment analysis.
Losses due to impairment correspond to estimates based on judgements made by top management in view of the facts and circumstances on a given date. As such, future events and developments are expected, in some cases, to converge into a different result vis-à-vis the estimate amount.
In order to ensure the adequacy of the impairment model to the macroeconomic scenario, the Bank carries out monthly impairment reviews of its individually analysed customers, as well as reviewing every six months the parameters applied to the collective part of its credit portfolio.
In terms of the individual analysis, impairment depends on the disbursement capacity of the debtor and/or respective guarantors, or the collaterals the Bank has to guarantee the lending transactions, applying the reference criteria described in Circular Letter 02/2014/DSP issued by the Bank of Portugal.
As far as the collective part of the portfolio is concerned and especially the calculation of LGD estimates, these are calculated based on the history of effective recoveries, as well as on conservative assumptions, defined and approved by Management for future estimates.
In compliance with the conceptual model on which impairment calculations are based, every month an analysis is carried out to the overall credit portfolio divided into seven main groups: (i) default loans, (ii) loans in arrears (30- 90 days), (iii) restructured loans, (iv) non-performing loans (with impairment signs), (v) healing loans, (vi) healed loans, and (vii) performing loans.
A loan is considered defaulted whenever it shows at least one of the following signs:
Loans in arrears for more than 90 days;
Customers in insolvency/bankruptcy situations or undergoing a special revitalisation process (PER);
Bank guarantees called in by the beneficiary.
A customer's full exposure is considered defaulted whenever the sum of their transactions in arrears for more than 90 days exceeds 20% of total exposure.
Homogeneous segments result from the creation of transaction groups that have similar credit risks, taking into consideration the Bank's management model. In order to do so, we have defined as relevant segmentation factors some lending transactions characteristics, such as type of customer, materiality of the exposure, type of product and type of associated collateral.
The segmentation currently in force distinguishes between specific PD segmentation and specific LGD segmentation:
| PD segmentation | LGD segmentation | |||
|---|---|---|---|---|
| State and other public bodies | ||||
| Banco Popular Group | ||||
| Employees | ||||
| Corporate Customers | ||||
| Relevant customers | ||||
| Credit cards - Private customers | ||||
| Home loans w ith LTV <=80% |
||||
| Home loans | Home loans w ith LTV >80% |
|||
| Private customers w ith real collateral |
||||
| Consumer credit | ||||
| Consumer credit | Collateralised private customers | |||
| Property development | ||||
| Collateralised property loans | ||||
| Property constr. | Non-collateralised property loans | |||
| Credit cards - Corporate | ||||
| Corporate customers | Collateralised companies | |||
| Non-collateralised companies |
Probability of default (PD) represents the estimate based on the last 5 years of the Bank's history of the number of transactions with or without impairment signs that can default during a given period of time (emerging period). So that the Bank's history may reflect the current economic conditions, observations obtained are adjusted according to the following weights:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Weight | 10% | 15% | 15% | 30% | 30% |
PD is also differentiated according to the classification of each loan: (i) default loans, (ii) loans in arrears (30- 90 days), (iii) restructured loans, (iv) non-performing loans (with impairment signs), (v) healing loans, (vi) healed loans, and (vii) performing loans.
The Bank considers that a loan shows impairment signs when one of the following events occurs.
Customers with at least 1 loan undergoing out of court procedures to regularise their situation (PERSI);
Customers with at least 1 loan of material amount in the banking system in arrears, premium and interest cancelled/annulled or in court, according to information made available by the Central for Credit Liabilities of the Bank of Portugal;
On each reporting date a set of customers is selected, who due to the materiality of their exposure to the Bank are considered significant. Those customers are subject to an individual analysis procedure in order to conclude whether there is evidence of impairment or to determine the amount of impairment.
Individual analysis are carried out on:
Default customers or customers showing impairment signs with total liabilities of over 750,000 euros;
Significant customer portfolio with no impairment signs and total liabilities of over 2,500,000.
Customer lending subject to individual analysis in which no objective evidence of impairment is identified shall be included in homogeneous risk segments in order to be considered for collective impairment.
Operations that are in arrears for more than 90 days, or in insolvency situations or undergoing a special revitalisation process (PER), or that require more specialised monitoring are regularly migrated to a set of Agencies named Specialised Business Network (RNE).
The mission and objectives of that Network are the rigorous analysis, monitoring and management of customers and risks, carried out by Specialised Managers distributed into 3 segments (Private individuals, Corporate, and Large Risks). From a comprehensive vision of the whole recovery process, we try to find and employ the most adequate solutions for a quick credit recovery.
According to the impairment model used by the Bank, when objective evidence of an event that originated a loss due to impairment is identified, the amount of that loss shall be determined as the difference between the amount on the balance sheet and the present amount of the estimated future cash flows (excluding losses due to events that have not occurred yet), discounted at the original effective interest rate.
Estimated future cash flows included in the calculation regard the contractual amount for the loans, adjusted by any amounts that the Bank expects not to recover and the time frame in which it is foreseeable that those shall be carried out. The time frame for the recovery of cash flows is a very significant variable for the calculation of impairment, since an impairment loss is always recognised, even in the cases in which total recovery of the contractual outstanding cash flows is expected to be received but after the agreed dates. This situation shall not be verified in case the Bank receives compensation in full (for example, as interest or default interest) for the period in which the loan was overdue.
Estimating an amount and the moment future cash flows shall be recovered for a loan involves professional judgement. The best estimate for those, taking into consideration the guidelines defined on Circular Letter No. 02/2014/DSP, is based on reasonable assumptions and on observable data at the date impairment is assessed, on the capacity of a customer to pay or on the possibility of a foreclose on a collateral.
In the case of collective portfolios, a probability of default (PD) and a rate of loss given default (LGD) are applied to each homogeneous segment.
In the case of defaulted loans, PD is 100% and the balance is established at the moment each loan defaults.
LGD is an estimate of loss given default of a customer. For the calculation of this variable, a random sample of the Bank's history is used, based on a trust interval of 95% regarding every customer that has defaulted. Thus, the average loss is calculated for each segment based on every recovery discounted at the effective rate for the month in which that operation defaulted until maturity date/settlement, as well as possible future estimates for the cases in which operations have not been settled when the analysis is carried out.
Recovery of the loans included in the sample are checked on a case-by-case basis, including:
Emerging periods, which result from internal studies and the estimate of time management in the time frame between the event and default, are the following:
| Past-due loans - 30 to 90 days | 3 |
|---|---|
| Restructured loans | 12 |
| Show ing default signs |
6 |
| Healing | 12 |
| Performing and healed | |
| State and other public bodies, Corporate, Relevant customers, Residential loans, Real estate development, Construction and Companies |
9 |
| Banco Popular Group, Employees, Consumer credit and Private individual's credit cards |
7 |
For restructured or healing loans, average PD is determined for each month of the demarcation stage (24 or 12 months respectively); after that time curves are drawn and applied.
In the segments where those time curves do not show correlations that can be considered explanatory, the PD applied during the demarcation stage results from the weighted average by the total number of restructured or healing loans in each segment and in each month (without attributing different weights to moment PD was observed).
Additionally, from a conservative perspective, the minimum point of each curve may never be lower than the PD obtained for performing loans for the same period.
The following tables show the main points of the respective curves applied to restructured or healing loans and are as follows:
Performing operations or with impairment signs
| Normal portfolio | Default portfolio | |||
|---|---|---|---|---|
| Segment | Performing | Healed | > 30 days | Other signs |
| Credit cards - Private individuals | 1.7% | 0.0% | 58.0% | 10.4% |
| Corporate customers | 1.6% | 0.0% | 61.9% | 12.3% |
| Relevant customers | 1.6% | 8.0% | 60.4% | 17.5% |
| Property construction | 4.5% | 5.0% | 61.8% | 29.1% |
| Residential | 0.9% | 3.0% | 43.8% | 12.0% |
| Consumer credit | 3.8% | 6.2% | 55.0% | 20.6% |
| Employees | 0.0% | 0.0% | 32.8% | 2.0% |
| Companies | 3.6% | 3.7% | 62.1% | 24.5% |
| State and other public bodies | 0.0% | 0.0% | 52.5% | 0.0% |
| Banco Popular Group | 0.0% | 0.0% | 0.0% | 0.0% |
| Property development | 7.9% | 5.6% | 55.1% | 28.5% |
Restructured operations
| Time frame of the restructuring process (months) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Segment | n+1 | n+2 | n+3 | n+4 | n+5 | n+6 | n+7 | n+8 | n+9 | n+10 | n+11 | n+12 |
| Credit cards - Private individuals | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% |
| Corporate customers | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% |
| Relevant customers | 63.6% | 49.2% | 40.8% | 34.9% | 30.3% | 26.5% | 23.3% | 20.6% | 18.1% | 16.0% | 14.0% | 12.2% |
| Property construction | 49.9% | 44.5% | 39.9% | 36.1% | 32.9% | 30.4% | 28.4% | 26.9% | 25.7% | 24.8% | 24.1% | 23.5% |
| Residential | 42.6% | 38.5% | 34.5% | 30.9% | 27.4% | 24.1% | 21.0% | 18.1% | 15.4% | 12.9% | 10.7% | 8.6% |
| Consumer credit | 61.7% | 48.2% | 40.3% | 34.7% | 30.3% | 26.7% | 23.7% | 21.1% | 18.8% | 16.8% | 14.9% | 13.2% |
| Employees | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
| Companies | 48.5% | 44.2% | 40.1% | 36.2% | 32.5% | 29.0% | 25.7% | 22.6% | 19.7% | 17.0% | 14.6% | 12.3% |
| State and other public bodies | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Banco Popular Group | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Property development | 40.3% | 36.8% | 33.4% | 30.2% | 27.1% | 24.2% | 21.5% | 18.9% | 16.4% | 14.1% | 11.9% | 9.9% |
| Segment | Time frame of the restructuring process (months) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| n+13 | n+14 | n+15 | n+16 | n+17 | n+18 | n+19 | n+20 | n+21 | n+22 | n+23 | n+24 | |
| Credit cards - Private individuals | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% | 31.8% |
| Corporate customers | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% | 59.8% |
| Relevant customers | 10.5% | 9.0% | 7.6% | 6.2% | 5.0% | 3.8% | 2.7% | 1.6% | 1.6% | 1.6% | 1.6% | 1.6% |
| Property construction | 23.0% | 22.4% | 21.7% | 20.8% | 19.6% | 18.0% | 16.0% | 13.5% | 10.3% | 6.5% | 4.5% | 4.5% |
| Residential | 6.7% | 5.0% | 3.6% | 2.3% | 1.3% | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% |
| Consumer credit | 11.7% | 10.2% | 8.9% | 7.6% | 6.4% | 5.3% | 4.3% | 3.9% | 3.9% | 3.9% | 3.9% | 3.9% |
| Employees | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
| Companies | 10.2% | 8.3% | 6.6% | 5.2% | 3.9% | 3.4% | 3.4% | 3.4% | 3.4% | 3.4% | 3.4% | 3.4% |
| State and other public bodies | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Banco Popular Group | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Property development | 8.1% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% | 7.9% |
| Segment | Time frame of the healing process (months) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| n+1 | n+2 | n+3 | n+4 | n+5 | n+6 | n+7 | n+8 | n+9 | n+10 | n+11 | n+12 | |
| Credit cards - Private individuals | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% | 42.5% |
| Corporate customers | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% | 51.0% |
| Relevant customers | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% | 38.4% |
| Property construction | 61.3% | 47.3% | 35.0% | 24.5% | 15.7% | 8.8% | 4.5% | 4.5% | 4.5% | 4.5% | 4.5% | 4.5% |
| Residential | 39.5% | 35.8% | 32.2% | 28.6% | 24.9% | 21.3% | 17.6% | 14.0% | 10.3% | 6.7% | 3.1% | 1.0% |
| Consumer credit | 52.1% | 48.2% | 46.0% | 44.4% | 43.1% | 42.1% | 41.3% | 40.5% | 39.9% | 39.3% | 38.8% | 38.3% |
| Employees | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
| Companies | 57.8% | 52.8% | 47.7% | 42.7% | 37.7% | 32.7% | 27.7% | 22.7% | 17.7% | 12.6% | 7.6% | 3.4% |
| State and other public bodies | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Banco Popular Group | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Property development | 63.2% | 59.5% | 55.9% | 52.2% | 48.5% | 44.8% | 41.1% | 37.4% | 33.7% | 30.0% | 26.3% | 22.7% |
LGD applied as at June 2014 was the following:
| Segment | LGD |
|---|---|
| Credit cards - Corporate | 57.8% |
| Credit cards - Private individuals | 45.0% |
| Corporate customers | 10.1% |
| Relevant customers | 10.8% |
| Collateralised property loans | 19.5% |
| Non-collateralised property loans | 37.2% |
| Home loans w ith LTV <=80% |
8.3% |
| Home loans w ith LTV > 80% |
10.5% |
| Consumer credit | 47.9% |
| Employees | 6.3% |
| Collateralised companies | 20.5% |
| Non-collateralised companies | 30.8% |
| State and other public bodies | 0.0% |
| Banco Popular Group | 0.0% |
| Collateralised private individuals | 8.6% |
| Non-collateralised private individuals | 32.1% |
| Property development | 8.8% |
As at June 30 2014, an increase by 10% in PD would imply an increase by 4.1 million euros in the total amount of impairment. A similar increase in LGD would imply an increase by 17.9 million euros.
An increase by 10% in both variables would imply a 22.4 million euros increase in the total amount of impairment.
| Detailed exposures and impairments by segment. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Exposure as at 30/06/2014 | Impairment as at 30/06/2014 | ||||||||||
| Segment | Total exposure |
Impaired loans |
Of w hich: healed |
Of w hich: restructured |
Default loans | Of w hich: restructured |
Total impairment |
Performing loans |
Default loans | ||
| Corporate | 492 923 | 447 917 | 5 461 | 30 123 | 45 006 | 12 516 | 33 004 | 20 489 | 12 515 | ||
| Property construction and CRE | 544 386 | 358 920 | 1 239 | 56 709 | 185 466 | 73 643 | 76 954 | 14 264 | 62 690 | ||
| Residential | 1 612 409 | 1 483 539 | 5 083 | 99 213 | 128 870 | 35 320 | 19 503 | 5 411 | 14 092 | ||
| Relevant | 983 597 | 792 591 | 6 342 | 60 853 | 191 006 | 87 138 | 62 114 | 9 367 | 52 747 | ||
| Companies | 1 760 387 | 1 455 272 | 5 701 | 36 933 | 305 115 | 56 438 | 128 467 | 25 006 | 103 461 | ||
| Other | 255 251 | 208 390 | 106 | 7 019 | 46 861 | 6 493 | 21 598 | 3 091 | 18 507 | ||
| Total | 5 648 953 | 4 746 629 | 23 932 | 290 850 | 902 324 | 271 548 | 341 640 | 77 628 | 264 012 |
| Of Total Exposure as at 30-06-2014: | Of Total Impairment as at 30-06-2014: | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performing loans | Default loans | Performing loans | Default loans | ||||||||||
| Total Exposure | Days past-due <30 | Days past-due | Days past-due | Total impairment | Days past-due | Days past-due | |||||||
| Segment | 30.06.14 | With no default signs With default signs betw | een 30-90 | <= 90 | > 90 | 30.06.14 | < 30 | entre 30 - 90 | <= 90 | > 90 | |||
| Corporate | 492 923 | 342 774 | 104 413 | 730 | 15 294 | 29 712 | 33 004 | 19 807 | 682 | 5 402 | 7 113 | ||
| Property Construction and CRE | 544 386 | 252 976 | 94 041 | 11 903 | 33 052 | 152 414 | 76 954 | 12 676 | 1 588 | 12 139 | 50 551 | ||
| Residential | 1 612 409 | 1 225 123 | 220 492 | 37 924 | 7 103 | 121 767 | 19 503 | 3 939 | 1 472 | 911 | 13 181 | ||
| Relevant | 983 597 | 631 630 | 145 018 | 15 943 | 52 624 | 138 382 | 62 114 | 9 339 | 28 | 16 911 | 35 836 | ||
| Companies | 1 760 387 | 1 317 581 | 108 830 | 28 861 | 56 132 | 248 983 | 128 467 | 21 043 | 3 963 | 19 612 | 83 849 | ||
| Other | 255 251 | 185 028 | 18 841 | 4 521 | 743 | 46 118 | 21 598 | 2 181 | 910 | 309 | 18 198 | ||
| Total | 5 648 953 | 3 955 112 | 691 635 | 99 882 | 164 948 | 737 376 | 341 640 | 68 985 | 8 643 | 55 284 | 208 728 |
| Corporate | Property construction and CRE | Residential | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Production year |
Number of transactions |
Amount | Constituted impairment |
Number of transactions |
Amount | Constituted impairment |
Number of transactions |
Amount | Constituted impairment |
| <= 2004 | 1 | 149 | 30 656 | 4 690 | 3 469 | 168 603 | 2 272 | ||
| 2005 | 85 | 16 449 | 1 605 | 2 058 | 116 673 | 1 578 | |||
| 2006 | 5 | 12 534 | 20 | 121 | 23 239 | 1 743 | 1 850 | 104 150 | 2 467 |
| 2007 | 1 | 959 | 1 | 254 | 47 585 | 4 441 | 2 157 | 128 407 | 3 012 |
| 2008 | 23 | 16 423 | 546 | 1 270 | 27 997 | 4 216 | 2 837 | 174 478 | 2 062 |
| 2009 | 15 | 103 190 | 1 854 | 708 | 39 905 | 9 226 | 3 314 | 216 075 | 2 525 |
| 2010 | 48 | 59 510 | 3 785 | 1 192 | 61 164 | 13 924 | 4 286 | 308 940 | 2 920 |
| 2011 | 102 | 51 037 | 7 516 | 1 258 | 64 812 | 11 025 | 2 103 | 172 642 | 1 217 |
| 2012 | 52 | 40 263 | 5 274 | 1 485 | 85 451 | 11 165 | 976 | 80 714 | 868 |
| 2013 | 109 | 162 261 | 9 442 | 1 479 | 92 324 | 10 136 | 1 107 | 85 814 | 467 |
| 2014 | 49 | 46 746 | 4 566 | 1 328 | 54 804 | 4 783 | 673 | 55 913 | 115 |
| Total | 405 | 492 923 | 33 004 | 9 329 | 544 386 | 76 954 | 24 830 | 1 612 409 | 19 503 |
| Relevant | Companies | Other | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Production year |
Number of transactions |
Amount | Constituted impairment |
Number of transactions |
Amount | Constituted impairment |
Number of transactions |
Amount | Constituted impairment |
|
| <= 2004 | 16 | 35 859 | 2 796 | 161 | 10 143 | 930 | 946 | 19 439 | 246 | |
| 2005 | 14 | 25 126 | 1 575 | 197 | 14 065 | 3 566 | 552 | 8 718 | 304 | |
| 2006 | 15 | 44 338 | 8 467 | 340 | 15 876 | 2 762 | 1 389 | 12 229 | 934 | |
| 2007 | 34 | 93 456 | 6 352 | 848 | 39 201 | 4 985 | 1 866 | 11 922 | 2 204 | |
| 2008 | 62 | 112 119 | 7 978 | 4 364 | 42 973 | 7 392 | 19 601 | 27 360 | 3 868 | |
| 2009 | 286 | 85 330 | 2 946 | 2 671 | 77 954 | 13 536 | 8 952 | 26 306 | 2 970 | |
| 2010 | 78 | 87 677 | 7 885 | 4 967 | 165 365 | 21 683 | 11 740 | 43 314 | 4 193 | |
| 2011 | 92 | 116 866 | 1 772 | 5 692 | 227 366 | 19 976 | 8 488 | 37 058 | 3 444 | |
| 2012 | 62 | 117 242 | 8 108 | 7 482 | 325 879 | 20 256 | 11 944 | 19 332 | 1 323 | |
| 2013 | 112 | 221 247 | 9 490 | 9 139 | 471 735 | 19 253 | 10 655 | 33 037 | 1 392 | |
| 2014 | 114 | 44 337 | 4 744 | 9 423 | 369 830 | 14 129 | 4 740 | 16 536 | 720 | |
| Total | 885 | 983 597 | 62 113 | 45 284 | 1 760 387 | 128 468 | 80 873 | 255 251 | 21 598 |
c) Detailed amount of gross credit exposure and individual and collectively assessed impairment by segment, business sector and geography.
| 30-06-2014 | Corporate | Prop. Constr. and CRE | Residential | |||||
|---|---|---|---|---|---|---|---|---|
| Exposure | Impairment | Exposure | Impairment | Exposure | Impairment | |||
| Assessment | ||||||||
| Individual | 455 242 | 32 058 | 128 531 | 33 749 | 12 795 | 2 049 | ||
| Collective | 37 681 | 946 | 415 855 | 43 205 | 1 599 614 | 17 454 | ||
| Total | 492 923 | 33 004 | 544 386 | 76 954 | 1 612 409 | 19 503 |
| 30-06-2014 | Relevant | Companies | Other | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Exposure | Impairment | Exposure | Impairment | Exposure | Impairment | Exposure | Impairment | |
| Assessment | ||||||||
| Individual | 983 597 | 62 114 | 113 590 | 34 815 | 12 024 | 51 | 1 705 779 | 164 836 |
| Collective | 1 646 797 | 93 652 | 243 227 | 21 547 | 3 943 174 | 176 804 | ||
| Total | 983 597 | 62 114 | 1 760 387 | 128 467 | 255 251 | 21 598 | 5 648 953 | 341 640 |
| 30-06-2014 | Property constr. | Industries | Commerce | ||||
|---|---|---|---|---|---|---|---|
| Exposure | Impairment | Exposure | Impairment | Impairment | |||
| Assessment | |||||||
| Individual | 339 140 | 57 000 | 144 131 | 13 083 | 134 786 | 20 189 | |
| Collective | 210 298 | 25 009 | 624 317 | 30 667 | 660 123 | 43 120 | |
| Total | 549 438 | 82 009 | 768 448 | 43 750 | 794 909 | 63 309 |
| 30-06-2014 | Banks/Insurance Comp. | Real estate | Other | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Exposure | Impairment | Exposure | Impairment | Exposure | Impairment | Exposure | Impairment | |
| Assessment | ||||||||
| Individual | 381 761 | 19 852 | 213 576 | 22 656 | 333 426 | 25 876 | 1 546 820 | 158 656 |
| Collective | 34 967 | 1 332 | 110 023 | 7 758 | 496 141 | 23 584 | 2 135 869 | 131 470 |
| Total | 416 728 | 21 184 | 323 599 | 30 414 | 829 567 | 49 460 | 3 682 689 | 290 126 |
| 30-06-2014 | Portugal | |
|---|---|---|
| Exposure | Impairment | |
| Assessment | ||
| Individual | 1 705 779 | 164 836 |
| Collective | 3 943 174 | 176 804 |
| Total | 5 648 953 | 341 640 |
| 30-06-2014 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Impaired loans | Default loans | Total | ||||||||||
| Measure | Number of transactions |
Exposure | Impairment | Number of transactions |
Exposure | Impairment | Number of transactions |
Exposure | Impairment | |||
| Deadline extension | 506 | 95 783 | 3 872 | 244 | 83 684 | 11 387 | 750 | 179 467 | 15 259 | |||
| Grace period | 1 238 | 50 567 | 2 760 | 864 | 55 984 | 15 287 | 2 102 | 106 551 | 18 047 | |||
| Other measures | 1 602 | 144 500 | 6 991 | 992 | 131 880 | 35 695 | 2 594 | 276 380 | 42 686 | |||
| Total | 3 346 | 290 850 | 13 623 | 2 100 | 271 548 | 62 369 | 5 446 | 562 398 | 75 992 |
| 30-06-14 | |
|---|---|
| Initial balance of the portfolio of restructured loans (gross of impairment) | 551 689 |
| Restructured loans during the period | 61 903 |
| Interest from the restructured portfolio | 4 296 |
| Settlement of restructured loans (partial of full) | - 52 664 |
| Loans reclassified from 'restructured' to 'performing' | - 8 512 |
| Other | 5 686 |
| Final balance of the portfolio of restructured loans (gross of impairment) | 562 398 |
| 30-06-2014 | Corporate | Property construction and CRE | Residential | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Real estate | Other real collaterals | Real estate | Other real collaterals | Real estate | Other real collaterals | |||||||
| Fair value | No. | Amount | No. | Amount | No. | Amount | No. | Amount | No. | Amount | No. | Amount |
| < 0.5 M€ | 1 | 425 | 3 | 375 | 1 137 | 162 650 | 987 | 52 946 | 18 384 | 2 584 820 | 503 | 21 770 |
| >= 0.5 M€ and < 1 M€ | 3 | 1 611 | 159 | 111 031 | 32 | 20 146 | 212 | 136 549 | 3 | 1 750 | ||
| >= 1 M€ and < 5 M€ | 2 | 6 708 | 2 | 4 656 | 122 | 231 357 | 17 | 33 399 | 31 | 48 986 | 5 | 7 970 |
| >= 5 M€ and < 10 M€ | 2 | 13 071 | 1 | 5 997 | 9 | 54 639 | ||||||
| >= 10 M€ and < 20 M€ | 1 | 12 501 | 2 | 22 655 | ||||||||
| >= 20 M€ and < 50 M€ | 1 | 24 303 | ||||||||||
| >= 50 M€ | 2 | 476 892 | ||||||||||
| Total | 8 | 509 597 | 12 | 59 597 | 1 427 | 559 677 | 1 036 | 106 491 | 18 627 | 2 770 355 | 511 | 31 490 |
| 30-06-2014 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Segment/Ratio | Number of properties |
Performing loans |
Default loans | Impairment | ||||
| Corporate | ||||||||
| Without any collateral | n.a. | 373 241 | 20 698 | 22 236 | ||||
| < 60% | 3 | 25 580 | 7 473 | |||||
| >= 60% and < 80% | 3 | 38 056 | 16 265 | 685 | ||||
| >= 80% and < 100% | 1 | 4 089 | 7 | |||||
| >= 100% | 1 | 6 952 | 8 043 | 2 603 | ||||
| Property construction and CRE | ||||||||
| Without any collateral | n.a. | 150 286 | 100 379 | 49 532 | ||||
| < 60% | 8 644 | 477 567 | 41 503 | 9 378 | ||||
| >= 60% and < 80% | 5 181 | 511 745 | 24 911 | 4 194 | ||||
| >= 80% and < 100% | 4 334 | 477 214 | 43 176 | 6 955 | ||||
| >= 100% | 1 308 | 166 436 | 60 097 | 14 207 | ||||
| Residential | ||||||||
| Without any collateral | n.a. | 2 173 | 3 198 | 2 863 | ||||
| < 60% | 448 | 29 276 | 17 946 | 4 005 | ||||
| >= 60% and < 80% | 51 | 15 622 | 9 313 | 1 837 | ||||
| >= 80% and < 100% | 22 | 4 093 | 7 959 | 1 187 | ||||
| >= 100% | 66 | 8 048 | 5 854 | 2 298 |
h) Detailed fair value and net book value of repossessed properties or foreclosed properties, by type of asset or time elapsed.
| 30-06-2014 | |||
|---|---|---|---|
| Assets | Number of properties |
Fair value of the asset |
Book value |
| Land | |||
| Urban | 94 | 12 267 | 10 438 |
| Rural | 21 | 5 556 | 4 311 |
| Properties under development | |||
| Residential | 391 | 34 377 | 33 797 |
| Commercial | 25 | 1 776 | 1 587 |
| Other | 123 | 4 604 | 4 124 |
| Built properties | |||
| Residential | 553 | 72 603 | 68 632 |
| Commercial | 136 | 14 787 | 13 695 |
| Other | 179 | 26 325 | 24 168 |
| Other | 38 | 8 401 | 7 908 |
| 1 560 | 180 696 | 168 660 |
| 30-06-2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Time elapsed since repossession/foreclosure |
< 1 year | >= 1 year and < 2.5 years |
>= 2.5 years and < 5 years |
< 5 years | Total | ||||
| Land | |||||||||
| Urban | 1 071 | 2 252 | 2 573 | 4 542 | 10 438 | ||||
| Rural | 46 | 3 754 | 244 | 267 | 4 311 | ||||
| Properties under development | |||||||||
| Residential | 625 | 0 | 0 | 961 | 1 586 | ||||
| Commercial | 5 273 | 11 411 | 473 | 16 640 | 33 797 | ||||
| Other | 0 | 0 | 3 708 | 416 | 4 124 | ||||
| Built properties | |||||||||
| Residential | 4 453 | 3 560 | 1 992 | 3 690 | 13 695 | ||||
| Commercial | 28 595 | 26 372 | 6 949 | 6 716 | 68 632 | ||||
| Other | 10 719 | 8 856 | 2 923 | 1 671 | 24 169 | ||||
| Other | 4 494 | 3 037 | 173 | 204 | 7 908 | ||||
| 55 276 | 59 242 | 19 035 | 35 107 | 168 660 |
Banco Popular does not employ internal credit ratings.
Risk parameters associated with the impairment model by segment are explained in paragraph (n) of the qualitative disclosures of this note.
Had the Bank's individual financial statements been prepared according to the International Financial Reporting Standards (IAS/IFRS), they would show the following changes:
After applying the IFRS, the accounting policies would reflect the following changes:
a) Loans and advances to customers
According to the IFRS the accounting policies applicable to loans and advances to customers correspond to what is stated on item 2.1 of the Notes to the Financial Statements, except for credit provisioning as foreseen in Notice No. 3/95 issued by the Bank of Portugal, which is replaced by impairment determined according to the model described on note 47.
b) Other tangible assets
With respect to property for own use at the date of transition to IFRS (1 January 2006) we have elected to use the option provided by IFRS 1 using fair value as deemed cost obtained through an assessment made by independent experts, considering the difference between that amount and the property's carrying value in retained earnings minus deferred tax. That amount becomes the cost amount on that date subject to future depreciation.
Estimates for material adjustments that would derive from changes in accounting policies alluded to in the previous number, and the reconciliation between the balance sheet, the income statement and the statement of changes in equity in conformity with AAS for the ones resulting from the application of IFRS are presented in the following tables:
| (€ thousand) | ||||||
|---|---|---|---|---|---|---|
| 30-06-2014 | 30-06-2013 | |||||
| AAS | IFRS | AAS | IFRS | |||
| Net amount | Adjust. | Net amount | Net amount | Adjust. | Net amount | |
| Assets | ||||||
| Cash and balances w ith central banks |
50 712 | 50 712 | 52 219 | 52 219 | ||
| Deposits w ith banks |
66 622 | 66 622 | 68 853 | 68 853 | ||
| Financial assets held for trading | 103 903 | 103 903 | 55 107 | 55 107 | ||
| Other financial assets at fair v alue through profit or loss |
0 | 0 | 32 320 | 32 320 | ||
| Av ailable-for-sale financial assets |
1 869 916 | 1 869 916 | 2 256 880 | 2 256 880 | ||
| Loans and adv ances to banks |
1 260 684 | 1 260 684 | 677 770 | 677 770 | ||
| Loans and adv ances to customers |
5 353 776 | - 46 463 | 5 307 313 | 5 693 052 | - 47 356 | 5 645 696 |
| Non-current assets held for sale | 20 747 | 20 747 | 22 579 | 22 579 | ||
| Other tangible assets | 79 820 | 9 791 | 89 611 | 85 324 | 9 791 | 95 115 |
| Intangible assets | 111 | 111 | 202 | 202 | ||
| Current income tax assets |
3 566 | 3 566 | 3 053 | 3 053 | ||
| Deferred income tax assets |
78 458 | - 119 | 78 339 | 72 160 | - 333 | 71 827 |
| Other assets | 444 457 | 444 457 | 561 518 | 561 518 | ||
| Total Assets | 9 332 772 | - 36 791 | 9 295 981 | 9 581 037 | - 37 898 | 9 543 139 |
| Liabilities | ||||||
| Deposits from central banks | 1 307 918 | 1 307 918 | 1 609 046 | 1 609 046 | ||
| Financial liabilities held for trading | 36 184 | 36 184 | 32 296 | 32 296 | ||
| Deposits from banks | 2 333 034 | 2 333 034 | 1 807 930 | 1 807 930 | ||
| Due to customers | 3 995 174 | 3 995 174 | 4 189 605 | 4 189 605 | ||
| Debt securities issued | 711 299 | 711 299 | 1 066 572 | 1 066 572 | ||
| Hedging deriv ativ es |
119 294 | 119 294 | 89 064 | 89 064 | ||
| Prov isions |
51 391 | - 46 949 | 4 442 | 52 459 | - 48 612 | 3 847 |
| Current income tax liabilities |
528 | 528 | 1 860 | 1 860 | ||
| Deferred income tax liabilities |
24 749 | 2 399 | 27 148 | 15 218 | 2 594 | 17 812 |
| Other liabilities | 40 767 | 40 767 | 37 281 | 37 281 | ||
| Total Liabilities | 8 620 338 | - 44 550 | 8 575 788 | 8 901 331 | - 46 018 | 8 855 313 |
| Equity | ||||||
| Share capital | 476 000 | 476 000 | 476 000 | 476 000 | ||
| Share premium | 10 109 | 10 109 | 10 109 | 10 109 | ||
| Fair v alue reserv es |
- 8 760 | 5 402 | - 3 358 | - 82 585 | 4 905 | - 77 680 |
| Other reserv es and retained earnings |
233 883 | 4 673 | 238 556 | 274 133 | 5 250 | 279 383 |
| Income for the period | 1 202 | - 2 316 | - 1 114 | 2 049 | - 2 035 | 14 |
| Total Equity | 712 434 | 7 759 | 720 193 | 679 706 | 8 120 | 687 826 |
| Total Liabilities + Equity | 9 332 772 | - 36 791 | 9 295 981 | 9 581 037 | - 37 898 | 9 543 139 |
| (€ thousand) | ||||||
|---|---|---|---|---|---|---|
| 30-06-2014 | 30-06-2013 | |||||
| AAS | Adjust. | IFRS | AAS | Adjust. | IFRS | |
| Interest and similar income | 133 481 | 133 481 | 161 149 | 161 149 | ||
| Interest and similar charges | 71 407 | 71 407 | 96 986 | 96 986 | ||
| Net interest income | 62 074 | 0 | 62 074 | 64 163 | 0 | 64 163 |
| Return on equity instruments |
58 | 58 | 47 | 47 | ||
| Fees and commissions receiv ed |
34 168 | 34 168 | 29 081 | 29 081 | ||
| Fees and commission paid | 4 349 | 4 349 | 4 383 | 4 383 | ||
| Net gains from financial assets at fair v alue |
0 | |||||
| through profit or loss | - 1 499 | - 1 499 | 769 | 769 | ||
| Net gains from av ailable-for-sale financial assets |
9 702 | 9 702 | 1 064 | 1 064 | ||
| Net gains from foreign ex change differences |
562 | 562 | 673 | 673 | ||
| Net gains from the sale of other assets | - 5 182 | - 5 182 | 2 614 | 2 614 | ||
| Other operating income | - 3 214 | - 3 214 | - 3 138 | - 3 138 | ||
| Operating income | 92 320 | 0 | 92 320 | 90 890 | 0 | 90 890 |
| Personnel ex penses |
28 585 | 28 585 | 27 913 | 27 913 | ||
| General administrativ e ex penses |
27 293 | 27 293 | 25 112 | 25 112 | ||
| Depreciation and amortization | 2 003 | 2 003 | 2 483 | 2 483 | ||
| Prov isions net of rev ersals |
337 | 337 | - 2 129 | - 2 129 | ||
| Adjustments to loans and adv ances to customers |
||||||
| (net of rev ersals) |
35 866 | 3 068 | 38 934 | 32 185 | 2 769 | 34 954 |
| Impairment of other assets net of rev ersals |
- 3 040 | - 3 040 | 1 992 | 1 992 | ||
| Net income before tax | 1 276 | - 3 068 | - 1 792 | 3 334 | - 2 769 | 565 |
| Income tax | 74 | - 752 | - 678 | 1 285 | - 734 | 551 |
| Current tax | 587 | 587 | 218 | 218 | ||
| Deferred tax | - 513 | - 752 | - 1 265 | 1 067 | - 734 | 333 |
| Net income for the period | 1 202 | - 2 316 | - 1 114 | 2 049 | - 2 035 | 14 |
| (€ thousand) | ||||||
|---|---|---|---|---|---|---|
| Share Capital |
Share premium |
Fair value reserves |
Other reserves and retained earnings |
Net income |
Total | |
| Balances as at 30/06/2014 - AAS | 476 000 | 10 109 | - 8 760 | 233 883 | 1 202 | 712 434 |
| Credit impairment - Adjustments - regulatory prov isions - Deferred tax |
3 553 - 870 |
- 3 067 751 |
486 - 119 |
|||
| Valuation of ow n property - Fair v alue |
7 801 | 1 990 | 9 791 | |||
| - Deferred tax | - 2 399 | - 2 399 | ||||
| Balances as at 30/06/2014 - IFRS | 476 000 | 10 109 | - 3 358 | 238 556 | - 1 114 | 720 193 |
| Share Capital |
Share premium |
Revaluation reserves |
Other reserves and retained earnings |
Net income |
Total | |
| Balances as at 30/06/2013 - AAS | 476 000 | 10 109 | - 82 585 | 274 133 | 2 049 | 679 706 |
| Credit impairment - Adjustments - regulatory prov isions - Deferred tax Valuation of ow n property |
4 025 | - 2 769 734 |
- 2 769 4 759 |
|||
| - Fair v alue |
7 500 | 2 291 | 9 791 | |||
| - Deferred tax | - 2 595 | - 1 066 | - 3 661 | |||
| Balances as at 30/06/2013 - IFRS | 476 000 | 10 109 | - 77 680 | 279 383 | 14 | 687 826 |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.