Quarterly Report • Dec 1, 2014
Quarterly Report
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In accordance with Article 10 of the CMVM Regulation nr.5/2008 we are pleased to transcribe the
BANCO COMERCIAL PORTUGUÊS, S.A.
a public company (Sociedade Aberta)
having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 3,500,000,000.00.
Investor Relations Rui Coimbra Phone +351 211 131 084 [email protected] [email protected] [email protected]
Media Contact Erik T. Burns Phone +351 211 131 242 Mobile +351 917 265 020 [email protected] [email protected]
| Financial Highlights | Euro million | |||
|---|---|---|---|---|
| 30 Sep. 14 | 30 Sep. 13 | Change 14 / 13 |
||
| Balance sheet | ||||
| Total assets | 78,798 | 83,121 | -5.2% | |
| Loans to customers (gross) (1) | 57,926 | 60,101 | -3.6% | |
| Total customer funds (1) | 64,942 | 63,212 | 2.7% | |
| Balance sheet customer funds (1) | 52,885 | 51,263 | 3.2% | |
| Customer deposits (1) | 49,638 | 47,084 | 5.4% | |
| Loans to customers, net / Customer deposits (2) | 111% | 122% | ||
| Loans to customers, net / Customer deposits (3) | 111% | 122% | ||
| Results | ||||
| Net income | (98.3) | (597.3) | ||
| Net interest income | 791.0 | 613.8 | 28.9% | |
| Net operating revenues | 1,722.0 | 1,257.3 | 37.0% | |
| Operating costs | 857.6 | 888.0 | -3.4% | |
| Loan impairment charges (net of recoveries) | 874.5 | 618.6 | 41.4% | |
| Other impairment and provisions | 143.0 | 375.4 | -61.9% | |
| Income taxes | ||||
| Current | 88.2 | 56.6 | ||
| Deferred | (259.0) | (195.0) | ||
| Profitability | ||||
| Net operating revenues / Average net assets (2) | 2.8% | 1.9% | ||
| Return on average assets (ROA) (4) | 0.0% | -0.8% | ||
| Income before taxes and non-controlling interests / Average net assets (2) | -0.3% | -1.0% | ||
| Return on average equity (ROE) | -4.2% | -27.6% | ||
| Income before taxes and non-controlling interests / Average equity (2) | -6.5% | -25.3% | ||
| Credit quality Overdue and doubtful loans / Total loans (2) |
||||
| 9.7% | 9.1% | |||
| Overdue and doubtful loans, net / Total loans, net (2) | 3.9% | 3.6% | ||
| Credit at risk / Total loans (2) | 12.1% | 12.3% | ||
| Credit at risk, net / Total loans, net (2) | 6.4% | 7.0% | ||
| Impairment for loan losses / Overdue loans by more than 90 days (1) | 79.6% | 81.6% | ||
| Efficiency ratios (2) (5) | ||||
| Operating costs / Net operating revenues | 51.9% | 70.3% | ||
| Operating costs / Net operating revenues (Portugal) | 54.0% | 88.8% | ||
| Staff costs / Net operating revenues | 28.9% | 39.8% | ||
| Capital | ||||
| Common equity tier I (CRD IV/CRR phased-in) (6) | 12.8% | - | ||
| Common equity tier I (CRD IV/CRR fully-implemented) (6) | 10.2% | - | ||
| Core tier I (Basel II) (2) | - | 12.7% | ||
| Tier I (Basel II) (2) | - | 12.3% | ||
| Total (Basel II) (2) | ||||
| - | 13.7% | |||
| Branches | ||||
| Portugal activity | 721 | 783 | -7.9% | |
| Foreign activity | 730 | 738 | -1.1% | |
| Employees | ||||
| Portugal activity | 8,266 | 8,703 | -5.0% | |
| Foreign activity | 10,272 | 10,080 | 1.9% |
(1) Adjusted from the effect related to the classification of Millennium bank in Romania and Millennium bcp Gestão de Activos as discontinued operations.
(2) According to Instruction from the Bank of Portugal no. 16/2004, as the currently existing version.
(3) Calculated in accordance with the definition from the Bank of Portugal.
(4) Considering net income before non-controlling interests.
(5) Excludes the impact of specific items: gains from the sale of the shareholdings associated with non-life insurance business (Euro 69.4 million in the first nine months of 2014), restructuring programme (Euro- 11.2 million in the first nine months of 2013) and legislative change related to mortality allowance (Euro 7.5 million in the first nine months of 2013).
(6) Calculated based on the Notice from BoP no. 3/95 and Law no. 61/2014 published on 26 August 2014 related with DTA. Proforma, includes the deconsolidation of the Romania operation.
Considering the commitment agreed with the Directorate General for Competition of the European Commission (DG Comp) on the Bank's Restructuring Plan, in particular the sale of Millennium bcp's operation in Romania in the mid-term and the implementation of a new approach to the asset management business, and according to IFRS 5, the activities of Millennium bank in Romania and of Millennium bcp Gestão de Activos were classified as discontinued operations, during 2013, with the impact on results of these operations presented on a separate line item in the profit and loss account, defined as "income arising from discontinued operations". As part of this, and in accordance with the referred accounting standard, the profit and loss account was restated as at 30 September 2013, for comparative purposes. At the consolidated balance sheet level, the presentation of assets and liabilities of Millennium bank in Romania and of Millennium bcp Gestão de Activos remained in the criteria considered on the consolidated financial statements as at 30 September 2013.
However, for a better interpretation of the performance of the Group's financial indicators, and for the purposes of this analysis, some balance sheet indicators are presented on a comparable basis, that is, excluding discontinued operations – Millennium bank in Romania and Millennium bcp Gestão de Activos.
The net income of Millennium bcp was negative at Euro 98.3 million in the first nine months of 2014, comparing favourably with the net loss of Euro 597.3 million registered in the same period of 2013. This evolution was boosted by increased contribution from international activities, together with improved profitability in Portugal, supported by positive net operating revenues performance, in particular in net interest income and net trading income.
Net income in the first nine months of 2014 was positively influenced by:
In spite of the following negative effects:
In spite of the impairment for loan losses charges, net income evolution in Portugal benefited from the increases in net trading income, net interest income and other net operating income, together with a reduction of operating costs, resulting in a net income improvement of Euro 469.7 million when compared to the first nine months of 2013.
Net income associated with international activity, excluding discontinued operations, showed a year-on-year increase of 15.1%, mainly driven by net operating revenues performance, in particular net interest and commission income, in particular at the operations in Poland, Angola and Mozambique.
Net interest income amounted to Euro 791.0 million in the first nine months of 2014, an increase of 28.9% from the Euro 613.8 million in the same period of 2013, benefiting from the sustained reduction of deposits cost and already reflecting a lower level of interest expense associated with the CoCos issuance, as a result of the early repayment of Euro 400 million in May 2014 and Euro 1,850 million completed in August 2014.
Net interest income performance in Portugal, when compared with the same period of 2013, remains constrained by the unfavourable business volumes effect, determined by credit demand retraction, in spite of the commercial initiatives aiming to support sustainable business projects. Excluding the CoCos impact, net interest income in Portugal increased by Euro 65.8 million, year-on-year, boosted by the improvement in the margin on term deposits resulting from an interest rate decrease of 69 basis points on a year-on-year basis.
Furthermore, net interest income from international activity increased 19.9% in the first nine months of 2014 when compared with the same period of 2013, on the back of the 56 basis points reduction of the interest rate on term deposits, together with the increase in loan volume, reflecting the trends observed in Poland, Angola and Mozambique.
Net interest margin for the first nine months of 2014 stood at 1.46% compared with 1.08% in the same period of 2013.
| AVERAGE BALANCES | Euro million | |||
|---|---|---|---|---|
| 30 Sep.14 | 30 Sep.13 | |||
| Balance | Yield % | Balance | Yield % | |
| Deposits in banks | 3,433 | 1.13 | 4,141 | 1.36 |
| Financial assets | 12,766 | 3.41 | 13,375 | 3.43 |
| Loans and advances to customers | 55,401 | 3.83 | 57,629 | 3.95 |
| Interest earning assets | 71,600 | 3.62 | 75,145 | 3.71 |
| Discontinued operations (1) | 424 | 2,353 | ||
| Non-interest earning assets | 9,486 | 9,181 | ||
| 81,510 | 86,679 | |||
| Amounts owed to credit institutions | 12,437 | 0.70 | 14,547 | 1.06 |
| Amounts owed to customers | 48,631 | 1.70 | 46,757 | 2.24 |
| Debt issued | 9,310 | 3.85 | 12,112 | 3.74 |
| Subordinated debt | 3,766 | 7.39 | 4,326 | 7.55 |
| Interest bearing liabilities | 74,144 | 2.09 | 77,742 | 2.55 |
| Discontinued operations (1) | 345 | 2,425 | ||
| Non-interest bearing liabilities | 3,021 | 2,806 | ||
| Shareholders' equity and non-controlling | ||||
| interests | 4,000 | 3,706 | ||
| 81,510 | 86,679 | |||
| Net interest margin | 1.46 | 1.08 | ||
| Net interest margin (excl. cost of CoCos) Note: Interest related to hedge derivatives were allocated, in September 2014 and 2013, to the respective balance sheet item. |
1.76 | 1.43 |
(1) Includes the activity of the subsidiaries in Greece (in 2013), in Romania and of Millennium bcp Gestão de Ativos, as well as the respective consolidation adjustments.
Net commissions amounted to Euro 506.2 million in the first nine months of 2014, an increase of 2.3%, from the same period of 2013, determined by the performance of the international activity (+7.8% year-on-year).
The evolution of net commissions in the first nine months of 2014 reflects the increase registered in commissions related to financial markets (+13.8%), both in the activity in Portugal (+16.2%) and in international activity (+11.7%).
The commissions related to the banking business showed a decrease of 0.3%, mainly in the activity in Portugal, reflecting an unfavourable effect induced by legislative changes related to overdrafts commissioning, in spite of the positive effect related to the decreased cost of the guarantee granted by the Portuguese State to debt securities issued by the Bank. The same trend is expected going forward given the repurchase and full cancelation of these issues during October 2014.
The performance of net trading income reflects the evolution observed in the activity in Portugal that benefited from higher income related with Portuguese sovereign debt securities in the amount of Euro 210.8 million when compared with the same period of 2013, of which Euro 123.6 million in financial assets available for sale posted on the third quarter of 2014.
In the international activity, net trading income totalled Euro 68.9 million in the first nine months of 2014 (Euro 81.9 million in September 2013), determined by foreign exchange operations in Angola and Mozambique and derivative trading operations in Poland.
| OTHER NET INCOME | Euro million | ||
|---|---|---|---|
| 30 Sep. 14 | 30 Sep. 13 | Change 14/13 |
|
| Net commissions | 506.2 | 494.8 | 2.3% |
| Banking commissions | 402.5 | 403.6 | -0.3% |
| Cards and transfers | 144.5 | 133.3 | 8.4% |
| Credit and guarantees | 116.9 | 112.1 | 4.2% |
| Bancassurance | 54.7 | 54.7 | 0.0% |
| Current account related | 57.6 | 85.3 | -32.5% |
| Commissions related with the State guarantee | (22.7) | (47.8) | - |
| Other commissions | 51.5 | 66.0 | -21.9% |
| Market related commissions | 103.7 | 91.1 | 13.8% |
| Securities | 74.8 | 66.3 | 12.9% |
| Asset management | 28.9 | 24.8 | 16.4% |
| Net trading income | 357.2 | 149.4 | - |
| Other net operating income | 33.6 | (48.7) | - |
| Dividends from equity instruments | 5.8 | 1.7 | - |
| Equity accounted earnings | 28.2 | 46.4 | -39.2% |
| Total other net income | 931.0 | 643.5 | 44.7% |
| Other net income / Net operating revenues | 54.1% | 51.2% |
Other net operating income totalled Euro 33.6 million in the first nine months of 2014, which compares to net losses of Euro 48.7 million in the same period of 2013. This evolution reflects the booking of a gain of Euro 69.4 million related to the disposal of the stake of 49% in subsidiaries that operated exclusively in the area of non-life insurance. In the activity in Portugal, this heading includes the contributions from the banking sector and for the resolution fund, both introduced in 2013, as well as for the deposits guarantee fund.
Dividends from equity instruments, which incorporate dividends received from investments in financial assets available for sale, and equity accounted earnings, totalled Euro 34.0 million in the first nine months of 2014, which compares with Euro 48.1 million in the same period of 2013. Equity accounted earnings essentially reflects the appropriation of results associated with the 49% stake in Millenniumbcp Ageas, hindered by the sale of non-life insurance business in the second quarter of 2014, in line with the focus on core activity defined in Strategic Plan.
Operating costs decreased 3.4% to Euro 857.6 million in the first nine months of 2014, from the Euro 888.0 million registered in the same period of 2013, reflecting the Strategic Plan´s defined targets, materialising the impact of the initiatives implemented focusing on rationalisation and cost containment in Portugal.
Excluding the effect of specific items, operating costs in Portugal, decreased 6.5% in the first nine months of 2014 when compared with the same period of 2013, on the back of the costs savings obtained in staff costs
(-7.3%), supported by the lower number of employees, together with the salary reduction carried out in the third quarter of 2014, and in other administrative costs (-5.3%).
In the international activity, operating costs increased 2.8% year-on-year, mainly induced by advertising related costs posted in Poland and from the increased distribution network in Angola and Mozambique.
| OPERATING COSTS | Euro million | ||
|---|---|---|---|
| 30 Sep. 14 | 30 Sep. 13 | Change 14/13 |
|
| Staff costs | 478.0 | 500.2 | -4.4% |
| Other administrative costs | 331.2 | 335.4 | -1.3% |
| Depreciation | 48.3 | 48.7 | -0.8% |
| Subtotal (1) | 857.6 | 884.3 | -3.0% |
| Specific items | |||
| Restructuring programme | – | 11.2 | |
| Legislative change related to mortality allowance | – | (7.5) | |
| Operating costs | 857.6 | 888.0 | -3.4% |
| Of which: | |||
| Portugal activity (1) | 517.0 | 553.2 | -6.5% |
| Foreign activity | 340.5 | 331.1 | 2.8% |
Staff costs totalled Euro 478.0 million in the first nine months of 2014, showing a decrease of 4.4% from the same period in 2013, excluding the effect of specific items.
This performance reflects the evolution of the activity in Portugal (-7.3%), where the number of employees decreased by 437 from the end of September 2013, together with temporary salary reduction measures for employees in Portugal, in spite of the 1.4% increase in the international activity.
Other administrative costs reduced 1.3%, to Euro 331.2 million in the first nine months of 2014, compared to Euro 335.4 million registered in the same period of 2013, supported by the above-mentioned cost rationalisation initiatives, including the resizing of the distribution network in Portugal (-62 branches from 30 September 2013), under the ongoing restructuring plan, in spite of the increase in international activities (+4.1%).
Other administrative costs evolution was positively influenced by the 5.3% year-on-year decrease registered in the activity in Portugal, driven by costs associated with rents, consulting and outsourcing, regardless of the 4.1% increase in the international activity, as a result of higher advertising costs posted in Poland.
Depreciation costs stood at Euro 48.3 million, a reduction of 0.8% from the same period of 2013, mainly due to the 5.7% decrease registered in the activity in Portugal, benefitting from lower depreciation costs associated with software and equipment.
In the international activity, depreciation totalled Euro 23.7 million, a year-on-year increase of 4.9%, driven by the subsidiaries in Mozambique and Angola.
Impairment for loan losses (net of recoveries) totalled Euro 874.5 million in the first nine months of 2014, which compares with Euro 618.6 million in the same period of 2013, determined by higher provision charges, both in Portugal and in international activity, which registered increases of 44.3% and 11.2%, respectively.
In Portugal, credit impairment increase, was mainly influenced by the higher level of impairment charges posted in the third quarter, as a consequence of the AQR exercise, whose outcome is published independently. In the international activity, the credit impairment charges increase is essentially driven by charges posted by Bank Millennium in Poland.
The cost of risk, excluding discontinued operations, stood at 201 basis points, compared with 137 basis points in the first nine months of 2013, reflecting the extraordinary impairment charges registered in Portugal.
Other impairment and provisions totalled Euro 143.0 million in the first nine months of 2014, compared to Euro 375.4 million registered in the same period of 2013. This performance reflects the reduction in other provisions for liabilities and charges that included, in the first nine months of 2013, Euro 80.0 million related with the subscription of shares in Piraeus Bank, part of the sale process of Millennium bank in Greece. Additionally, it comprises the reduction in provisions for guarantees and other commitments and in impairments of other assets.
Income tax (current and deferred) amounted to Euro -170.8 million in the first nine months of 2014, compared with Euro -138.4 million posted in the same period of 2013. These taxes include current tax costs of Euro 88.2 million (Euro 56.6 million in the first nine months of 2013) and deferred tax assets of Euro 259.0 million (Euro 195.0 million in the same period of 2013).
Total assets reached Euro 78,798 million as at 30 September 2014 (Euro 83,121 million as at 30 September 2013), which compares with Euro 82,007 million as at 31 December 2013,reflecting loan portfolio retraction in Portugal, together with a decrease in the securities portfolio, in particular financial assets available for sale, induced by lower exposure to sovereign debt securities.
Loans to customers (gross) stood at Euro 58,352 million as at 30 September 2014, which compares with Euro 60,588 million posted in the same date of 2013.
Excluding the impact of the loans portfolio associated with the operation in Romania, classified as discontinued operation, the loans portfolio showed a reduction of 3.6% from the end of September 2013, hindered by the moderate recovery of Portuguese economy and a reduced demand for credit.
In Portugal, loans portfolio registered a contraction of 6.8%, whereas in the international activity, excluding the impact from discontinued operations, loans increased 8.9% from 30 September 2013, boosted by the evolutions observed in Poland, Angola and Mozambique. When compared with 31 December 2013, loans to customers decreased 3.0%, induced by the evolution registered in Portugal (-5.7%), while the international activity showed an increase of 7.1% in the same period.
The performance of loans to customers, from 30 September 2013, was determined by the combine effect of a retraction in loans to companies (-6.1%) and loans to individuals decrease (-1.1%), influenced by the activity in Portugal. When compared with 31 December 2013, the loans to customers portfolio in Portugal, shows a decrease of 9.1% in loans to companies and 1.8% in loans to individuals, penalised by the enduring adverse economic context, determining a lower demand for credit associated with the ongoing adjustment of indebtedness levels of the private and public sectors and to reduced private investment.
Millennium bcp continued its strategy to support Portuguese companies through the offer of integrated product and services solutions aiming to bolster growth, internationalisation and competitiveness, with an emphasis on credit lines for SMEs as well as protocol-based credit.
The structure of the loans to customers portfolio showed identical and stable levels of diversification between the end of September 2013 an 2014, with loans to companies representing around 50% of total loans to customers, as at 30 September 2014.
| LOANS TO CUSTOMERS (GROSS) | Euro million | ||
|---|---|---|---|
| 30 Sep. 14 | 30 Sep. 13 | Change 14/13 |
|
| Individuals | 29,690 | 30,031 | -1.1% |
| Mortgage | 25,819 | 26,577 | -2.9% |
| Consumer | 3,870 | 3,454 | 12.0% |
| Companies | 28,236 | 30,070 | -6.1% |
| Services | 11,268 | 12,235 | -7.9% |
| Commerce | 3,405 | 3,260 | 4.5% |
| Construction | 4,323 | 4,808 | -10.1% |
| Other | 9,240 | 9,767 | -5.4% |
| Subtotal | 57,926 | 60,101 | -3.6% |
| Discontinued operations | 427 | 487 | |
| Total | 58,352 | 60,588 | -3.7% |
| Of which (1): | |||
| Portugal activity | 44,554 | 47,826 | -6.8% |
| Foreign activity | 13,372 | 12,275 | 8.9% |
| (1) Excludes the impact from discontinued operations (Millennium bank in Romania). |
Credit quality, determined by loans overdue by more than 90 days as a percentage of total loans, adjusted for discontinued operations, stood at 7.5% as at 30 September 2014, compared with 7.1% as at 31 December 2013 (7.0% as at 30 September 2013), mostly influenced by the performance of the loans to companies portfolio, hindered by the continued uncertainty and moderate recovery of the Portuguese economy, with impact on the materialisation of credit risk.
The coverage ratio for loans overdue by more than 90 days, adjusted from the effect from the operations classified as discontinued, stood at 79.6% as at 30 September 2014, from 80.1% at the end of 2013 (81.6% as at 30 September 2013) and the coverage ratio of the total loans overdue portfolio to impairments stood at 77.6% as at 30 September 2014, compared with 77.8% as at 31 December 2013 (79.2% as at 30 September 2013).
| Euro million | ||||
|---|---|---|---|---|
| Overdue loans by more than 90 days |
Impairment for loan losses |
Overdue loans by more than 90 days /Total loans |
Coverage ratio (Impairment/ Overdue >90 days) |
|
| Individuals | 890 | 857 | 3.0% | 96.2% |
| Mortgage | 254 | 345 | 1.0% | 136.0% |
| Consumer | 637 | 512 | 16.5% | 80.4% |
| Companies | 3,481 | 2,622 | 12.3% | 75.3% |
| Services | 1,150 | 1,024 | 10.2% | 89.0% |
| Commerce | 406 | 302 | 11.9% | 74.3% |
| Construction | 1,200 | 714 | 27.8% | 59.5% |
| Other | 725 | 582 | 7.9% | 80.3% |
| Subtotal (1) | 4,372 | 3,478 | 7.5% | 79.6% |
| Discontinued operations | 50 | 66 | 11.6% | 132.2% |
| Total | 4,421 | 3,544 | 7.6% | 80.2% |
Overdue and doubtful loans stood at 9.7% of total loans as at 30 September 2014, which compares with 9.2% posted at the end of 2013 (9.1% as at 30 September 2013) and credit at risk stood at 12.1% of total loans as at 30 September 2014, compared with 11.9% at the end of 2013 (12.3% as at 30 September 2013). As at 30 September 2014, restructured loans stood at 11.2% of total loans (9.5% as at 31 December 2013) and restructured loans not included in credit at risk stood at 7.2% of total loans, as at 30 September 2014 (6.4% as at 31 December 2013).
Total customer funds, excluding the aforementioned effect from discontinued operations, totalled Euro 64,942 million as at 30 September 2014, an increase of 2.7% from the Euro 63,212 million posted as at 30 September 2013, boosted by increased customer deposits and assets under management, both in Portugal and in the international activity, in spite of the transfer of funds associated with the rights issue completed in July 2014.
The total customer funds evolution, compared with the first nine months of 2013, benefited from the positive performance associated with:
In the activity in Portugal, total customer funds increased 1.1%, totalling Euro 48,072 million as at 30 September 2014 (Euro 47,559 million as at 30 September 2013), on the back of the 4.3% increase in customer deposits and the 16.1% increase in assets under management, in spite of the 22.8% reduction in debt securities from the end of September 2013.
In international activity, total customer funds grew 7.8% standing at Euro 16,870 million as at 30 September 2014 (Euro 15,653 million as at 30 September 2013),determined by deposits acquisition efforts and the evolution registered for off-balance sheet customer funds, as a reflection of the favourable performance in overall international operations, in particular in Poland and Switzerland.
As at 30 September 2014, excluding discontinued operations, balance sheet customer funds represented 81% of total customer funds, with highlight on customer deposits that increased their weight in total customer funds from 74% as at 30 September 2013 to 76% as at 30 September 2014.
| TOTAL CUSTOMER FUNDS | Euro million | ||
|---|---|---|---|
| 30 Sep. 14 | 30 Sep. 13 | Change 14/13 |
|
| Balance sheet customer funds | 52,885 | 51,263 | 3.2% |
| Deposits | 49,638 | 47,084 | 5.4% |
| Debt securities | 3,247 | 4,179 | -22.3% |
| Off-balance sheet customer funds | 12,057 | 11,949 | 0.9% |
| Assets under management | 3,561 | 3,137 | 13.5% |
| Capitalisation products | 8,496 | 8,812 | -3.6% |
| Subtotal | 64,942 | 63,212 | 2.7% |
| Discontinued operations | 1,836 | 1,782 | |
| Total | 66,778 | 64,994 | 2.7% |
| Of which (1): | |||
| Portugal activity | 48,072 | 47,559 | 1.1% |
| Foreign activity | 16,870 | 15,653 | 7.8% |
The securities portfolio totalled Euro 14,052 million as at 30 September 2014, which compares with Euro 15,300 million as on the same data of 2013, representing 17.8% of total assets as at 30 September 2014, below the level registered as at 30 September 2013 (18.4% of total assets).
This change in the securities portfolio reflects the reduction of financial assets available for sale, together with financial assets held to maturity, influenced by the reduction in the portfolio of sovereign debt financial instruments.
In the third quarter of 2014 the Bank continued to implement its 2014 Liquidity Plan, aimed at controlling funding needs, assuring a dynamic and optimised management of the portfolio of eligible assets at the European Central Bank (ECB) and also monitoring and taking advantage of opportunities in the wholesale funding market.
Accordingly, the commercial gap of the activity in Portugal, measured by the difference between net loans and balance sheet customer funds, continued its favourable trend during the third quarter of 2014, when compared either with the amount observed at the end of the second quarter (a decrease of Euro 1.4 billion) or with the amount as at 30 September of 2013 (a decrease of Euro 3.8 billion).
Regarding the composition of the wholesale funding structure, the share capital increase operation, completed in the third quarter of 2014 in the amount of Euro 2.2 billion, allowed a new early redemption of Euro 1.85 billion of core tier I capital instruments (CoCos) subscribed by the Portuguese State, increasing to Euro 2.25 billion the sum of the reimbursements of that instrument, above the goal of Euro 400 million defined in the Liquidity Plan for the year.
In addition of these transactions, until September 2014, the Bank amortised Euro 1.8 billion of medium and long term debt (from a forecasted sum of Euro 3.0 billion for the year). On the other hand, in February, the favourable evolution of market conditions justified the return of the Bank to the wholesale markets ahead of schedule, through an issue of senior debt amounting to Euro 500 million, which was initially foreseen in the third quarter of 2014.
Regarding the diversification of funding sources, another objective of the Liquidity Plan was implemented through repos with international financial institutions, collateralised by securities, which balance totaled Euro 1.2 billion at the end of September 2014.
By the end of September 2014, considering the impact of the early redemption of debt issues guaranteed by the state amounting to Euro 2.0 billion (Euro 1.8 billion after haircuts), the eligible assets with the ECB totaled Euro 17.1 billion.
During the first nine months of 2014, in spite of the redemption of Euro 4.1 billion of medium and long term debt, the combined impact of the sustained commercial gap reduction, the decrease of the portfolio of sovereign debt, the senior debt issuance and the diversification of the funding base allowed a reduction of Euro 3.3 billion of the net funding with the ECB (of which Euro 2.0 billion in the third quarter), from Euro 10.0 billion as at 31 December 2013 to Euro 6.7 billion as at 30 September 2014.
Accordingly, the liquidity buffer attained an amount of Euro 10.4 billion in at the end of September 2014, which compares favourably with the objectives stated in the Liquidity Plan.
Throughout 2014, the progressive reduction of the funding needs with the ECB allowed, for greater effectiveness and flexibility in treasury management, the early redemption of additional tranches of Long Term Refinancing Operations (LTRO) amounting to Euro 5 billion (of which Euro 2 billion in the third quarter). With an original total of Euro 12 billion, the current balance of these operations was Euro 6.0 billion at the end of September 2014.
On 26 June 2013, the European Parliament and Council approved Directive 2013/36/EU and Regulation (EU) no. 575/2013 (Capital Requirements Directive IV / Capital Requirements Regulation - CRD IV/CRR) that established new and more demanding capital requirements for credit institutions, with effects as from 1 January 2014.
These stricter requirements result from more narrowly defined capital and risk weighted assets, together with the establishment of minimum ratios, including a capital conservation buffer, of 7% for Common Equity Tier 1 (CET1), 8.5% for Tier 1 and 10.5% for Total Capital. The CRD IV/CRR also stipulates a transitional period (phase-in) in which institutions may accommodate the new requirements, both in terms of own funds and compliance with minimum capital ratios.
Nevertheless, Bank of Portugal, through Notice no. 6/2013 of 23 December, stipulated the obligation to ensure the maintenance of a CET1 ratio no lower than 7%, determining the adoption of capital conservation measures whenever this will not occur.
According to our interpretation of CRD IV/CRR to date, estimated CET1 ratios at 30 September 2014 stood at 12.8% by the standards of the phase-in, an increase of 19 basis points when compared to the 12.6% as at 30 June 2014, and 10.2% on the fully implemented rules, 4 basis points above the 10.1% of the previous quarter (proforma values considering the effects of the Law no. 61/2014, that established a special regime for the deferred tax assets, with the Notice no. 3/95 from Bank of Portugal, and the sale of the subsidiary in Romania, in both periods, as well as the effects of the share capital increase of Euro 2,242 million and the repayment of CoCos of Euro 1,850 million, accomplished in July and August 2014, respectively, in the capital ratios of June).
The performance of the proforma CET1 ratio in the third quarter of 2014 benefited from the decrease of the shortfall of impairment to expected loss, given the reinforcement of provisioning that took place, on the one hand, and the increased contribution of minority interests in foreign subsidiaries and foreign exchange reserves, following the weakening trend of the Euro in this period, on the other, despite the adverse effects related to the net loss reported in this quarter, the higher amount of deferred tax assets and the increase of risk weighted assets.
| PHASED-IN | FULLY IMPLEMENTED | |||
|---|---|---|---|---|
| 30 Sep. 14 | 30 Jun. 14 | 30 Sep. 14 | 30 Jun. 14 | |
| Own funds | ||||
| Common equity tier 1 (CET1) | 5,702 | 5,511 | 4,484 | 4,423 |
| Tier 1 | 5,702 | 5,511 | 4,538 | 4,474 |
| Total Capital | 6,484 | 6,228 | 5,087 | 5,020 |
| Risk weighted assets | 44,456 | 43,616 | 44,037 | 43,623 |
| Solvency ratios | ||||
| CET1 | 12.8% | 12.6% | 10.2% | 10.1% |
| Tier 1 | 12.8% | 12.6% | 10.3% | 10.3% |
| Total capital | 14.6% | 14.3% | 11.6% | 11.5% |
(*) Estimate: proforma values considering the effects of the Law no. 61/2014, that established a special regime for the deferred tax assets, with the Notice no. 3/95 from Bank of Portugal, and the sale of the subsidiary in Romania, in both periods, as well as the effects of the share capital increase of Euro 2,242 million and the repayment of CoCos of Euro 1,850 million, accomplished in July and August 2014, respectively, in the capital ratios of June.
The reimbursement to the Portuguese State of a significant part of the Government Subscribed Core Tier 1 Capital Instruments (CoCos), after obtaining approval by the Bank of Portugal and as defined under the share capital increase operation completed in July 2014, as well as the agreement for the sale of the entire share capital of Banca Millennium in Romania, which represents a further step in implementing the measures included in BCP's Restructuring Plan, represented the most significant events in the Bank's activity in the third quarter of 2014. In October, the agreement for the sale of the entire share capital of Millennium bcp Gestão de Ativos, along with the approval of the accession to the special regime applicable to deferred tax assets by shareholders at Banco Comercial Português´s General Meeting on 15 October, represented additional steps to strengthen the Common Equity Tier 1 (CET1).
Highlights during this period include:
According to the most recent IMF projections, the world economy should continue to move at a pace short of the historical standards, hampered by the legacy of the debt built up before the economic and financial crisis and by the correction of the macroeconomic disequilibria that followed it. In this context, the emerging economies should continue to slowdown (from 4.7% in 2013 to 4.4% in 2014), whilst the advanced economies should record lower growth levels (1.8%), trimming the world's economic growth to 3.3% in 2014. The IMF considers that the downward risks to the global recovery have intensified and stem to a large extent from fears of worsening geopolitical tensions and of a reversal of the strong optimism environment that has been predominant in financial markets.
In the first nine months of 2014 the behavior of the international financial markets was characterised by a steady valuation across the main asset classes, reflecting expectations of a sustained economic recovery as well as the abundance of liquidity generated by the accommodative stance of global monetary policy. In the equity segment it should be highlighted the successive record highs of the main American equity indexes and the strong performance of the European counterparts. Within the debt market, interest rate followed a declining trend, especially for longer maturities, a trajectory that was extended to the government bonds of the euro area's peripheral countries, including Portugal. The emerging markets' assets continued to show modest or even negative performances, mirroring the slowdown of the BRIC, a situation that has contributed to the weak performance of commodities.
Faced with low inflation levels and the concomitant intensification of deflationary risks most central banks maintained and in some cases reinforced the degree of accommodation of the respective monetary policies. The main exception to this rule came from the US Federal Reserve, which has since January been steadily tapering the amount of liquidity injected in the financial system via its program of debt securities purchases. The ECB not only cut its main refinancing rate to 0.05% and its deposit facility rates to negative values, but also announced its intention to implement a purchase program of private debt securities in order to push inflation closer to 2% and simultaneously to ease the funding conditions to the economy, in particular in the periphery of the euro area.
According to Statistics Portugal, in the second quarter of 2014 Portuguese GDP recorded an annual growth rate of 0.9%, 0.1 p.p. less than in the preceding quarter. This result was exclusively explained by the behavior of domestic demand, especially private consumption and fixed capital investment, since the contribution of the external demand was negative. The most relevant economic activity indicators pertaining to the third quarter of 2014 suggest a slight acceleration of activity, spurred by the increase of exports and the deceleration of imports. Notwithstanding the turbulence that affected the Portuguese banking system during the summer months the apparent strengthening of the economic recovery that started in 2013 together with the positive development of sentiment in international financial markets fostered a further fall of the yields of government bonds towards levels close to the lowest since the euro's inception in 1999.
For 2014, the IMF predicts an acceleration of activity in Poland, from 1.6% to 3.2%, bolstered by the robustness in domestic demand. However, despite the signs of greater dynamism of economic activity, the geopolitical tension in Ukraine, the drop in the inflation rate and the Zloty's resilience should favor the continuation of an extraordinarily accommodative monetary policy stance. In Romania the slowdown in activity along with the fall in inflation led the monetary authority to lower the reference interest rate to 3.0% in September. In Mozambique, the intensification of the foreign direct investment associated to the megaprojects and to other industrial development projects should continue to propel the economy, which the IMF expects to increase at a rate of 8.3% this year. In Angola, the cumulative drop in oil prices throughout the current year is hampering economic growth, essentially via a slowdown in exports and fixed capital formation. In this environment, the IMF revised downwards its GDP growth rate forecast for 2014 from 5.3% to 3.9%.
Capitalisation products – includes unit link and retirement saving plans.
Cost of risk - ratio of impairment charges (net of recoveries) on the period to the loan portfolio.
Credit at risk – definition that, according to the Bank of Portugal, is broader than the overdue loans by more than 90 days + doubtful loans, including, in particular, the possibility that debtors with overdue payments still do not fulfil their credit responsibilities. For detailed definition see instruction from the Bank of Portugal no. 16/2004, as the currently existing version.
Debt securities - debt securities issued by the Bank and placed with customers.
Dividends from equity instruments - dividends received from investments in financial assets available for sale.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the Group does not control the financial and operational policies.
Net interest margin - net interest income as a percentage of average interest earning assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other net operating income.
Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from available for sale financial assets, net gains/losses arising from financial assets held to maturity.
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, goodwill impairment and other provisions.
Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.
Other net operating income - other operating income, other net income from non-banking activities and gains from the sale of subsidiaries and other assets.
Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes.
Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement and financial assets held to maturity.
Total customer funds - amounts due to customers (including securities), assets under management and capitalisation products.
| ONSOLIDATLD INDICATORS. ACTIVITT IN FORTOGAL AND INTLINIATIONAL ACTIVITT | Consolidated | Activity in Portugal | Laro mation International activity |
||||||
|---|---|---|---|---|---|---|---|---|---|
| 30 Sep 14 30 Sep 13 | Change 14/13 |
30 Sep 14 30 Sep 13 | Change 14/13 |
30 Sep 14 30 Sep 13 | Change 14/13 |
||||
| Income statement | |||||||||
| Net interest income | 791.0 | 613.8 | 28.9% | 351.3 | 247.2 | 42.1% | 439.6 | 366.6 | 19.9% |
| Dividends from equity instruments | 5.8 | 1.7 | >200% | 2.3 | 1.2 | 86.3% | 3.6 | 0.4 | >200% |
| Net fees and commission income | 506.2 | 494.8 | 2.3% | 320.5 | 322.4 | $-0.6%$ | 185.7 | 172.3 | 7.8% |
| Other operating income | 33.6 | (48.7) | × | 36.7 | (61.8) | (3.0) | 13.1 | ||
| Net trading income | 357.2 | 149.4 | 139.1% | 288.3 | 67.5 | 68.9 | 81.9 | $-15.9%$ | |
| Equity accounted earnings | 28.2 | 46.4 | $-39.2%$ | 28.2 | 46.1 | $-38.8%$ | 0.3 | ||
| Net operating revenues | 1,722.0 | 1,257.3 | 37.0% | 1,027.2 | 622.6 | 65.0% | 694.8 | 634.6 | 9.5% |
| Staff costs | 478.0 | 503.9 | $-5.1%$ | 311.5 | 339.7 | $-8.3%$ | 166.5 | 164.2 | 1.4% |
| Other administrative costs | 331.2 | 335.4 | $-1.3%$ | 180.9 | 191.1 | $-5.3%$ | 150.3 | 144.3 | 4.1% |
| Depreciation | 48.3 | 48.7 | $-0.8%$ | 24.6 | 26.1 | $-5.7%$ | 23.7 | 22.6 | 4.9% |
| Operating costs | 857.6 | 888.0 | $-3.4%$ | 517.0 | 556.9 | $-7.2%$ | 340.5 | 331.1 | 2.8% |
| Operating profit before impairment | 864.4 | 369.2 | 134.1% | 510.2 | 65.7 | ÷ | 354.2 | 303.5 | 16.7% |
| Loans impairment (net of recoveries) | 874.5 | 618.6 | 41.4% | 813.4 | 563.6 | 44.3% | 61.2 | 55.0 | 11.2% |
| Other impairment and provisions | 143.0 | 375.4 | $-61.9%$ | 142.2 | 373.4 | $-61.9%$ | 0.7 | 2.1 | |
| Profit before income tax | (153.1) | (624.8) | × | (445.4) | (871.3) | ٠ | 292.3 | 246.4 | 18.6% |
| Income tax | (170.8) | (138.4) | (229.9) | (185.9) | 59.2 | 47.5 | 24.5% | ||
| Income after income tax from continuing operations | 17.7 | (486.4) | ÷ | (215.5) | (685.4) | 233.2 | 198.9 | 17.2% | |
| Income arising from discontinued operations | (34.1) | (43.6) | ä, | ||||||
| Non-controlling interests | 81.9 | 67.3 | 21.6% | 0.4 | 0.2 | 81.5 | 67.1 | 21.4% | |
| Net income | (98.3) | (597.3) | (215.9) | (685.6) | 151.7 | 131.8 | 15.1% | ||
| Balance sheet and activity indicators | |||||||||
| Total assets | 78,798 | 83,121 | $-5.2%$ | 58,578 | 64,380 | $-9.0%$ | 20,220 | 18,741 | 7.9% |
| Total customer funds (1) | 64,942 | 63,212 | 2.7% | 48,072 | 47,559 | 1.1% | 16,870 | 15,653 | 7.8% |
| Balance sheet customer funds (1) | 52,885 | 51,263 | 3.2% | 37,383 | 36,884 | 1.4% | 15,502 | 14,379 | 7.8% |
| Deposits | 49,638 | 47,084 | 5.4% | 34,241 | 32,816 | 4.3% | 15,397 | 14,268 | 7.9% |
| Debt securities | 3,247 | 4,179 | $-22.3%$ | 3,141 | 4,068 | $-22.8%$ | 105 | 111 | |
| Off-balance sheet customer funds (1) | 12,057 | 11,949 | 0.9% | 10,689 | 10,675 | 0.1% | 1,368 | 1,274 | 7.4% |
| Assets under management | 3,561 | 3,137 | 13.5% | 2,706 | 2,330 | 16.1% | 856 | 806 | 6.1% |
| Capitalisation products | 8,496 | 8,812 | $-3.6%$ | 7,984 | 8,345 | $-4.3%$ | 512 | 467 | 9.5% |
| Discontinued operations | 1,836 | 1,782 | 3.0% | 1,517 | 1,441 | 5.2% | 319 | 341 | $-6.3%$ |
| Loans to customers (gross) (1) | 57,926 | 60,101 | $-3.6%$ | 44,554 | 47,826 | $-6.8%$ | 13,372 | 12,275 | 8.9% |
| Individuals (1) | 29,690 | 30,031 | $-1.1%$ | 21,678 | 22,277 | $-2.7%$ | 8,011 | 7,755 | 3.3% |
| Mortgage | 25,819 | 26,577 | $-2.9%$ | 19,337 | 20,070 | $-3.6%$ | 6,482 | 6,507 | $-0.4%$ |
| Consumer | 3,870 | 3,454 | 12.0% | 2,341 | 2,207 | 6.1% | 1,529 | 1,247 | 22.6% |
| Companies (1) | 28,236 | 30,070 | $-6.1%$ | 22,876 | 25,549 | $-10.5%$ | 5,360 | 4,521 | 18.6% |
| Services | 11,268 | 12,235 | $-7.9%$ | 10,343 | 11,314 | $-8.6%$ | 925 | 921 | 0.4% |
| Commerce | 3,405 | 3,260 | 4.5% | 2,129 | 2,350 | $-9.4%$ | 1,276 | 910 | 40.3% |
| Construction | 4,323 | 4,808 | $-10.1%$ | 3,625 | 4,108 | $-11.8%$ | 698 | 700 | $-0.2%$ |
| Other | 9,240 | 9,767 | $-5.4%$ | 6,779 | 7,776 | $-12.8%$ | 2,461 | 1,990 | 23.6% |
| Discontinued operations | 427 | 487 | $-12.3%$ | 427 | 487 | -12.3% | |||
| Credit quality | |||||||||
| Total overdue loans (1) | 4,484 | 4,345 | 3.2% | 4,140 | 4,044 | 2.4% | 345 | 301 | 14.4% |
| Overdue loans by more than 90 days (1) | 4,372 | 4,217 | 3.7% | 4,055 | 3,937 | 3.0% | 316 | 279 | 13.2% |
| 7.5% | 7.0% | 9.1% | 8.2% | 2.4% | 2.3% | ||||
| Overdue loans by more than 90 days / Total loans (1) Total impairment (balance sheet) (1) |
3,478 | 3,442 | 1.1% | 3,031 | 3,006 | 0.8% | 448 | 436 | 2.7% |
| Total impairment (balance sheet) /Total loans (1) | 6.0% | 5.7% | 6.8% | 6.3% | 3.3% | 3.6% | |||
| Total impairment (balance sheet) / Overdue loans by more than 90 days (1) | 79.6% | 81.6% | 74.7% | 76.3% | 141.5% | 156.1% | |||
| 201 | 137 | 243 | 157 | 61 | 60 | ||||
| Cost of risk (net of recoveries, in b.p.) (1) Restructured loans / Total loans (2) |
11.2% | ||||||||
| (2) | 7.28 |
INDIVIDUAL/CONSOLIDATED QUARTERLY INFORMATION (Not Audited)
| (Model applicable to companies subject to the Accounting Plan for Banks/Leasing/Factoring companies) | ||||||
|---|---|---|---|---|---|---|
| Company: Banco Comercial Português, S.A._________ | ||||||
| Main Offices: Praça D. João I, 28 - 4000-295 Porto________NIPC: 501 525 882 | ||||||
| Period of Reference: | Reference values in 000Esc | in Euros | X | |||
| Quarter 1 Quarter 3 |
Quarter 5 (1) | Start: 01/01/2014 End: 30/09/2014 | ||||
| Balance Sheet Items | Individual | Consolidated | ||||
| n (NCA) | n-1 (NCA) | Var. (% ) | n (IAS) | n-1 (IAS) | Var. (% ) | |
| ASSETS (NET) | ||||||
| Loans to other credit institutions (2) | 1,112,003,214 | 8,945,351,055 | -87.57% | 1,634,757,028 | 2,559,023,369 | -36.12% |
| Loans to clients | 37,644,095,526 | 40,919,939,267 | -8.01% | 54,808,396,267 | 57,106,718,866 | -4.02% |
| Fixed income securities | 7,345,736,276 | 13,924,041,824 | -47.24% | 11,521,398,667 | 12,756,655,579 | -9.68% |
| Variable yield securities | 3,148,800,697 | 2,650,209,154 | 18.81% | 2,531,015,650 | 2,543,580,987 | -0.49% |
| Investments | 3,272,609,978 | 3,788,586,794 | -13.62% | 457,385,947 | 545,072,252 | -16.09% |
| SHAREHOLDER'S AND EQUIVALENT EQUITY | ||||||
| Equity Capital | 3,706,690,253 | 3,500,000,000 | 5.91% | 3,706,690,253 | 3,500,000,000 | 5.91% |
| Nº of ordinary shares | 54,194,709,415 | 19,707,167,060 | - | 54,194,709,415 | 19,707,167,060 | - |
| Nº of other shares | 0 | 0 | - | - | ||
| Value of own shares | 0 | 0 | - | 20,894,300 | 7,384,436 | 182.95% |
| Nº of voting shares | 0 | 0 | - | 201,682,429 | 76,921,204 | - |
| Nº of preferred, non voting shares | 0 | 0 | - | - | ||
| Subordinate loans | 2,030,975,659 | 6,031,801,856 | -66.33% | 2,064,133,418 | 4,408,289,857 | -53.18% |
| Minority interests | 0 | 0 | - | 764,673,073 | 661,076,853 | 15.67% |
| LIABILITIES | ||||||
| Amounts owed to credit institutions | 10,278,075,258 | 17,423,124,033 | -41.01% | 10,638,979,299 | 15,383,560,294 | -30.84% |
| Amounts owed to clients | 34,751,699,770 | 32,898,917,573 | 5.63% | 49,956,813,831 | 47,424,557,786 | 5.34% |
| Debt securities | 6,580,485,326 | 13,391,221,079 | -50.86% | 7,769,231,559 | 9,912,539,416 | -21.62% |
| TOTAL ASSETS (NET) | 59,301,738,051 | 77,219,271,074 | -23.20% | 78,797,744,989 | 83,121,402,217 | -5.20% |
| TOTAL SHAREHOLDER'S EQUITY | 3,749,008,574 | 2,443,148,045 | 53.45% | 4,819,929,028 | 2,715,126,688 | 77.52% |
| TOTAL LIABILITIES | 55,552,729,477 | 74,776,123,029 | -25.71% | 73,213,142,888 | 79,745,198,676 | -8.19% |
| Individual | Consolidated | |||||
|---|---|---|---|---|---|---|
| P & L Items | n | n-1 | Var. (% ) | n | n-1 | Var. (% ) |
| Financial margin (3) | 253,769,713 | 166,972,106 | 51.98% | 790,953,955 | 613,757,558 | 28.87% |
| Commissions and other oper. revenue (net) | 563,487,476 | 334,293,999 | 68.56% | 505,771,405 | 402,475,173 | 25.67% |
| Securities yield and profits from financial transaction | 580,360,500 | -70,923,038 | -918.30% | 310,438,275 | 53,667,632 | 478.45% |
| Banking Income | 1,397,617,689 | 430,343,067 | 224.77% | 1,607,163,635 | 1,069,900,363 | 50.22% |
| Personnel, administ. and other costs | -507,275,444 | -550,436,562 | -7.84% | -809,235,271 | -839,314,295 | -3.58% |
| Amortizations | -18,993,553 | -21,467,990 | -11.53% | -48,326,944 | -48,719,932 | -0.81% |
| Provisions (net of adjustments) | -1,361,341,669 | -1,423,398,535 | -4.36% | -964,956,782 | -896,705,813 | 7.61% |
| Extraordinary profit | 0 | 0 | n.a. | 0 | 0 | n.a. |
| Profit before taxes | -489,992,977 | -1,564,960,020 | -68.69% | -215,355,362 | -714,839,677 | -69.87% |
| Income tax (4) | 249,958,715 | 318,777,824 | -21.59% | 170,776,118 | 138,413,153 | 23.38% |
| Minority interests and income excluded from consoli | 0 | 0 | - | -53,677,884 | -20,899,409 | 156.84% |
| Net profit / loss for the quarter | -240,034,262 | -1,246,182,196 | -80.74% | -98,257,128 | -597,325,933 | -83.55% |
| Net profit / loss per share for the quarter | -0.0044 | -0.0632 | -93.00% | -0.0018 | -0.0303 | -94.02% |
| Self financing (5) | 1,140,300,960 | 198,684,329 | 473.93% | 915,026,598 | 348,099,812 | 162.86% |
(1) Aplicable to the first economic period of companies adopting a fiscal year different from the calendar year
(Art.65.º - A of the Portuguese Commercial Company Code)
(2) Includes repayable on demand to credit institutions
(3) Financial margin = Interest income - Interest expense
(4) Estimated income tax
(5) Self financing = Net profits + amortization + provision
Consolidated Income Statement for the nine months period ended 30 September, 2014 and 2013
| 30 September 2014 |
30 September 2013 |
|
|---|---|---|
| (Thousands of Euros) | ||
| Interest and similar income Interest expense and similar charges |
2,013,374 (1,222,420) |
2,146,073 (1,532,316) |
| Net interest income | 790,954 | 613,757 |
| Dividends from equity instruments Net fees and commission income Net gains / losses arising from trading and |
5,823 506,211 |
1,656 494,754 |
| hedging activities Net gains / losses arising from available for |
117,725 | 108,890 |
| sale financial assets Net gains / (losses) arising from financial |
239,432 | 40,761 |
| assets held to maturity Other operating income |
- (42,882) |
(278) (42,618) |
| 1,617,263 | 1,216,922 | |
| Other net income from non banking activity | 14,086 | 15,457 |
| Total operating income | 1,631,349 | 1,232,379 |
| Staff costs Other administrative costs Depreciation |
478,035 331,201 48,327 |
503,916 335,399 48,720 |
| Operating costs | 857,563 | 888,035 |
| Operating net income before provisions and impairments | 773,786 | 344,344 |
| Loans impairment Other financial assets impairment Other assets impairment Goodwill impairment Other provisions |
(874,538) (52,541) (22,423) (144) (67,851) |
(618,643) (97,361) (108,812) (7,722) (161,529) |
| Operating net income | (243,711) | (649,723) |
| Share of profit of associates under the equity method Gains / (losses) from the sale of subsidiaries and other assets |
28,221 62,426 |
46,440 (21,555) |
| Net (loss) / income before income tax Income tax |
(153,064) | (624,838) |
| Current Deferred |
(88,240) 259,016 |
(56,560) 194,973 |
| Net (loss) / income after income tax from continuing operations | 17,712 | (486,425) |
| Income arising from discontinued operations | (34,070) | (43,561) |
| Net income after income tax | (16,358) | (529,986) |
| Attributable to: Shareholders of the Bank Non-controlling interests |
(98,257) 81,899 |
(597,326) 67,340 |
| Net income for the period | (16,358) | (529,986) |
| Earnings per share (in euros) Basic |
0,00 | (0.02) |
| Diluted | 0,00 | (0.02) |
Consolidated Balance Sheet as at 30 September, 2014 and 2013 and 31 December, 2013
| 30 September 2014 |
31 December 2013 |
30 September 2013 |
|
|---|---|---|---|
| (Thousands of Euros) | |||
| Assets | |||
| Cash and deposits at central banks Loans and advances to credit institutions |
1,757,205 | 2,939,663 | 2,044,901 |
| Repayable on demand | 722,750 | 1,054,030 | 1,003,555 |
| Other loans and advances | 912,007 | 1,240,628 | 1,555,469 |
| Loans and advances to customers | 54,808,396 | 56,802,197 | 57,106,719 |
| Financial assets held for trading | 1,663,232 | 1,290,079 | 1,527,243 |
| Financial assets available for sale | 9,573,600 | 9,327,120 | 10,485,700 |
| Assets with repurchase agreement | 91,399 | 58,268 | 121,645 |
| Hedging derivatives | 72,385 | 104,503 | 136,935 |
| Financial assets held to maturity | 2,724,183 | 3,110,330 | 3,165,649 |
| Investments in associated companies | 457,386 | 578,890 | 545,072 |
| Non current assets held for sale | 1,590,655 | 1,506,431 | 1,265,560 |
| Investment property | 179,292 | 195,599 | 697,403 |
| Property and equipment | 774,931 | 732,563 | 529,133 |
| Goodwill and intangible assets | 248,111 | 250,915 | 250,068 |
| Current tax assets | 38,846 | 41,051 | 39,784 |
| Deferred tax assets | 2,409,734 | 2,181,405 | 1,892,356 |
| Other assets | 773,632 | 593,361 | 754,213 |
| 78,797,744 | 82,007,033 | 83,121,405 | |
| Liabilities | |||
| Amounts owed to credit institutions | 10,638,979 | 13,492,536 | 15,383,561 |
| Amounts owed to customers | 49,956,814 | 48,959,752 | 47,424,558 |
| Debt securities | 7,769,232 | 9,411,227 | 9,912,539 |
| Financial liabilities held for trading | 986,921 | 869,530 | 1,033,970 |
| Hedging derivatives | 263,608 | 243,373 | 274,593 |
| Provisions for liabilities and charges | 448,490 | 365,960 | 406,041 |
| Subordinated debt | 2,064,133 | 4,361,338 | 4,408,290 |
| Current income tax liabilities | 9,413 | 24,684 | 6,507 |
| Deferred income tax liabilities | 7,408 | 6,301 | 4,457 |
| Other liabilities | 1,068,144 | 996,524 | 890,686 |
| Total Liabilities | 73,213,142 | 78,731,225 | 79,745,202 |
| Equity | |||
| Share capital | 3,706,690 | 3,500,000 | 3,500,000 |
| Treasury stock | (33,325) | (22,745) | (14,977) |
| Preference shares | 171,175 | 171,175 | 171,175 |
| Other capital instruments | 9,853 | 9,853 | 9,853 |
| Fair value reserves | 159,255 | 22,311 | 13,296 |
| Reserves and retained earnings | 904,538 | (356,937) | (366,895) |
| Net income for the period attributable to Shareholders | (98,257) | (740,450) | (597,326) |
| Total Equity attributable to Shareholders of the Bank | 4,819,929 | 2,583,207 | 2,715,126 |
| Non-controlling interests | 764,673 | 692,601 | 661,077 |
| Total Equity | 5,584,602 | 3,275,808 | 3,376,203 |
| 78,797,744 | 82,007,033 | 83,121,405 |
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
| Notes | 30 September 2014 |
30 September 2013 |
|
|---|---|---|---|
| (Thousands of Euros) | |||
| Interest and similar income | 3 | 2,013,374 | 2,146,073 |
| Interest expense and similar charges | 3 | (1,222,420) | (1,532,316) |
| Net interest income | 790,954 | 613,757 | |
| Dividends from equity instruments | 4 | 5,823 | 1,656 |
| Net fees and commissions income | 5 | 506,211 | 494,754 |
| Net gains / (losses) arising from trading and | |||
| hedging activities | 6 | 117,725 | 108,890 |
| Net gains / (losses) arising from financial | |||
| assets available for sale | 7 | 239,432 | 40,761 |
| Net gains / (losses) arising from financial | |||
| assets held to maturity | 8 | - | (278) |
| Other operating income / (costs) | 9 | (42,882) | (42,618) |
| 1,617,263 | 1,216,922 | ||
| Other net income from non banking activities | 14,086 | 15,457 | |
| Total operating income | 1,631,349 | 1,232,379 | |
| Staff costs | 10 | 478,035 | 503,916 |
| Other administrative costs | 11 | 331,201 | 335,399 |
| Depreciation | 12 | 48,327 | 48,720 |
| Operating expenses | 857,563 | 888,035 | |
| Operating net income before provisions and impairment | 773,786 | 344,344 | |
| Loans impairment | 13 | (874,538) | (618,643) |
| Other financial assets impairment | 14 | (52,541) | (97,361) |
| Other assets impairment | 28 and 33 | (22,423) | (108,812) |
| Goodwill impairment | (144) | (7,722) | |
| Other provisions | 15 | (67,851) | (161,529) |
| Operating net loss | (243,711) | (649,723) | |
| Share of profit of associates under the equity method | 16 | 28,221 | 46,440 |
| Gains / (losses) arising from the sale of subsidiaries and | |||
| other assets | 17 | 62,426 | (21,555) |
| Net loss before income tax | (153,064) | (624,838) | |
| Income tax | |||
| Current | 32 | (88,240) | (56,560) |
| Deferred | 32 | 259,016 | 194,973 |
| (Loss) / income after income tax from continuing operations | 17,712 | (486,425) | |
| (Loss) / income arising from discontinued operations | 18 | (34,070) | (43,561) |
| Net loss after income tax | (16,358) | (529,986) | |
| Consolidated net (loss) / income for the period attributable to: | |||
| Shareholders of the Bank | (98,257) | (597,326) | |
| Non-controlling interests | 45 | 81,899 | 67,340 |
| Net loss for the period | (16,358) | (529,986) | |
| Earnings per share (in Euros) | 19 | ||
| Basic | 0,00 | (0.02) | |
| Diluted | 0,00 | (0.02) | |
| CHIEF ACCOUNTANT | THE EXECUTIVE COMMITTEE |
See accompanying notes to the interim consolidated financial statements
| Notes | 30 September 2014 |
31 December 2013 |
30 September 2013 |
||
|---|---|---|---|---|---|
| (Thousands of Euros) | |||||
| Assets | |||||
| Cash and deposits at Central Banks | 20 | 1,757,205 | 2,939,663 | 2,044,901 | |
| Loans and advances to credit institutions | |||||
| Repayable on demand | 21 | 722,750 | 1,054,030 | 1,003,555 | |
| Other loans and advances | 22 | 912,007 | 1,240,628 | 1,555,469 | |
| Loans and advances to customers | 23 | 54,808,396 | 56,802,197 | 57,106,719 | |
| Financial assets held for trading | 24 | 1,663,232 | 1,290,079 | 1,527,243 | |
| Financial assets available for sale | 24 | 9,573,600 | 9,327,120 | 10,485,700 | |
| Assets with repurchase agreement | 91,399 | 58,268 | 121,645 | ||
| Hedging derivatives | 25 | 72,385 | 104,503 | 136,935 | |
| Financial assets held to maturity | 26 | 2,724,183 | 3,110,330 | 3,165,649 | |
| Investments in associated companies | 27 | 457,386 | 578,890 | 545,072 | |
| Non-current assets held for sale | 28 | 1,590,655 | 1,506,431 | 1,265,560 | |
| Investment property | 29 | 179,292 | 195,599 | 697,403 | |
| Property and equipment | 30 | 774,931 | 732,563 | 529,133 | |
| Goodwill and intangible assets | 31 | 248,111 | 250,915 | 250,068 | |
| Current income tax assets | 38,846 | 41,051 | 39,784 | ||
| Deferred income tax assets | 32 | 2,409,734 | 2,181,405 | 1,892,356 | |
| Other assets | 33 | 773,632 | 593,361 | 754,213 | |
| Total Assets | 78,797,744 | 82,007,033 | 83,121,405 | ||
| Liabilities | |||||
| Deposits from credit institutions | 34 | 10,638,979 | 13,492,536 | 15,383,561 | |
| Deposits from customers | 35 | 49,956,814 | 48,959,752 | 47,424,558 | |
| Debt securities issued | 36 | 7,769,232 | 9,411,227 | 9,912,539 | |
| Financial liabilities held for trading | 37 | 986,921 | 869,530 | 1,033,970 | |
| Hedging derivatives | 25 | 263,608 | 243,373 | 274,593 | |
| Provisions | 38 | 448,490 | 365,960 | 406,041 | |
| Subordinated debt | 39 | 2,064,133 | 4,361,338 | 4,408,290 | |
| Current income tax liabilities | 9,413 | 24,684 | 6,507 | ||
| Deferred income tax liabilities | 32 | 7,408 | 6,301 | 4,457 | |
| Other liabilities | 40 | 1,068,144 | 996,524 | 890,686 | |
| Total Liabilities | 73,213,142 | 78,731,225 | 79,745,202 | ||
| Equity | |||||
| Share capital | 41 | 3,706,690 | 3,500,000 | 3,500,000 | |
| Treasury stock | 44 | (33,325) | (22,745) | (14,977) | |
| Preference shares | 41 | 171,175 | 171,175 | 171,175 | |
| Other capital instruments | 41 | 9,853 | 9,853 | 9,853 | |
| Fair value reserves | 43 | 159,255 | 22,311 | 13,296 | |
| Reserves and retained earnings | 43 | 904,538 | (356,937) | (366,895) | |
| Net loss for the period attributable to Shareholders | (98,257) | (740,450) | (597,326) | ||
| Total Equity attributable to Shareholders of the Bank | 4,819,929 | 2,583,207 | 2,715,126 | ||
| Non-controlling interests | 45 | 764,673 | 692,601 | 661,077 | |
| Total Equity | 5,584,602 | 3,275,808 | 3,376,203 | ||
| 78,797,744 | 82,007,033 | 83,121,405 |
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
| Third quarter 2014 |
Third quarter 2013 |
|
|---|---|---|
| (Thousands of Euros) | ||
| Interest and similar income | 663,701 | 708,182 |
| Interest expense and similar charges | (368,706) | (474,661) |
| Net interest income | 294,995 | 233,521 |
| Dividends from equity instruments | 97 | 164 |
| Net fees and commissions income | 165,028 | 161,901 |
| Net gains / (losses) arising from trading and | ||
| hedging activities | 63,082 | 109,332 |
| Net gains / (losses) arising from available for | ||
| sale financial assets | 118,914 | (13,097) |
| Other operating income | (16,927) | (18,289) |
| 625,189 | 473,532 | |
| Other net income from non banking activities | 4,866 | 5,026 |
| Total operating income | 630,055 | 478,558 |
| Staff costs | 154,644 | 167,316 |
| Other administrative costs | 109,706 | 109,259 |
| Depreciation | 16,511 | 15,390 |
| Operating expenses | 280,861 | 291,965 |
| Operating net income before provisions and impairment | 349,194 | 186,593 |
| Loans impairment | (502,908) | (144,675) |
| Other financial assets impairment | (13,412) | (84,014) |
| Other assets impairment | 7,873 | (41,162) |
| Goodwill impairment | (144) | (7,722) |
| Other provisions | (23,322) | (8,155) |
| Operating net (loss) / income | (182,719) | (99,135) |
| Share of profit of associates under the equity method | 5,227 | 15,797 |
| Gains / (losses) from the sale of subsidiaries and | ||
| other assets | (1,712) | (11,639) |
| Net (loss) / income before income tax Income tax |
(179,204) | (94,977) |
| Current | (25,736) | (20,645) |
| Deferred | 198,698 | 29,223 |
| (Loss) / income after income tax from continuing operations | (6,242) | (86,399) |
| (Loss) / income arising from discontinued operations | (465) | 645 |
| Net (loss) / income after income tax | (6,707) | (85,754) |
| Attributable to: | ||
| Shareholders of the Bank | (36,010) | (109,107) |
| Non-controlling interests | 29,303 | 23,353 |
| Net (loss) / income for the period | (6,707) | (85,754) |
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
| 30 September 2014 |
30 September 2013 |
|
|---|---|---|
| (Thousands of Euros) | ||
| Cash flows arising from operating activities | ||
| Interest income received | 1,795,539 | 1,886,328 |
| Commissions received | 648,115 | 686,533 |
| Fees received from services rendered | 62,329 | 64,384 |
| Interest expense paid | (1,191,463) | (1,235,306) |
| Commissions paid | (194,550) | (245,046) |
| Recoveries on loans previously written off | 10,835 | 9,467 |
| Net earned premiums | 19,997 | 20,457 |
| Claims incurred | (8,015) | (11,617) |
| Payments to suppliers and employees | (1,084,947) | (1,112,781) |
| 57,840 | 62,419 | |
| Decrease / (increase) in operating assets: Receivables from / (Loans and advances to) credit institutions |
29,822 | 1,377,841 |
| Deposits with Central Banks under monetary regulations | 1,293,261 | 1,540,509 |
| Loans and advances to customers | 2,486,646 | 2,029,593 |
| Short term trading account securities | (188,274) | (133,854) |
| Increase / (decrease) in operating liabilities: | ||
| Deposits from credit institutions repayable on demand | 80,551 | (166,500) |
| Deposits from credit institutions with agreed maturity date | (2,872,140) | 531,215 |
| Deposits from clients repayable on demand | 813,341 | 1,106,517 |
| Deposits from clients with agreed maturity date | (542,915) | (165,544) |
| 1,158,132 | 6,182,196 | |
| Income taxes (paid) / received | (71,339) | (58,563) |
| 1,086,793 | 6,123,633 | |
| Cash flows arising from investing activities | ||
| Proceeds from sale of shares in subsidiaries and associated companies | 125,963 | 2,595 |
| Dividends received | 9,204 | 4,458 |
| Interest income from available for sale financial assets and | ||
| held to maturity financial assets | 339,797 | 308,578 |
| Proceeds from sale of available for sale financial assets | 10,321,687 | 12,285,913 |
| Available for sale financial assets purchased | (64,320,010) | (62,986,980) |
| Proceeds from available for sale financial assets on maturity | 54,176,353 | 49,248,740 |
| Acquisition of fixed assets | (92,590) | (44,991) |
| Proceeds from sale of fixed assets | 23,747 | 36,290 |
| Decrease / (increase) in other sundry assets | (247,101) | (342,554) |
| 337,050 | (1,487,951) | |
| Cash flows arising from financing activities | ||
| Issuance of subordinated debt | 390 | 908 |
| Reimbursement of subordinated debt | (2,250,109) | (966) |
| Issuance of debt securities | 3,220,510 | 4,135,213 |
| Reimbursement of debt securities | (5,078,066) | (8,214,273) |
| Issuance of commercial paper and other securities | 111,011 | 151,307 |
| Reimbursement of commercial paper and other securities | (18,419) | (9,726) |
| Share capital increase | 2,241,690 | - |
| Dividends paid to non-controlling interests | (31,055) | (8,979) |
| Increase / (decrease) in other sundry liabilities and non-controlling interests | (102,198) | (583,328) |
| (1,906,246) | (4,529,844) | |
| Exchange differences effect on cash and equivalents | 40,282 | (48,799) |
| Net changes in cash and equivalents | (442,121) | 57,039 |
| Cash and equivalents at the beginning of the period | 1,733,730 | 1,562,300 |
| Cash (note 20) | 568,859 | 615,784 |
| Other short term investments (note 21) | 722,750 | 1,003,555 |
| Cash and equivalents at the end of the period | 1,291,609 | 1,619,339 |
| Other | (Amounts expressed in thousands of Euros) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| comprehensive income | |||||||||||
| Total equity |
Share capital |
Preference shares |
Other capital instruments |
Share premium |
statutory | Legal and Fair value and cash flow reserves hedged reserves |
Other | Other reserves and retained Treasury -controlling earnings |
stock | Non interests |
|
| Balance on 31 December, 2012 | 4,000,188 | 3,500,000 | 171,175 | 9,853 | 71,722 | 630,000 | 2,668 | (1,936,907) | 937,875 | (14,212) | 628,014 |
| Transfers to reserves: Share premium (note 43) |
- | - | - | - | (71,722) | - | - | - | 71,722 | - | - |
| Legal reserve (note 42) | - | - | - | - | - | (406,730) | - | - | 406,730 | - | - |
| Costs related to the share capital increase Tax related to costs arising from the |
1,574 | - | - | - | - | - | - | - | 1,574 | - | - |
| share capital increase | (394) | - | - | - | - | - | - | - | (394) | - | - |
| Deferred tax of actuarial losses | |||||||||||
| Gross value | (46,761) | - | - | - | - | - | - | (46,761) | - | - | - |
| Taxes Net (loss) / income for the period attributable to Shareholders of the Bank |
1,148 (597,326) |
- - |
- - |
- - |
- - |
- - |
- - |
1,148 - |
- (597,326) |
- - |
- - |
| Net (loss) / income for the period attributable to | |||||||||||
| Non-controlling interests (note 45) Dividends of SIM - Seguradora Internacional |
67,340 | - | - | - | - | - | - | - | - | - | 67,340 |
| de Moçambique, S.A.R.L. | (8,979) | - | - | - | - | - | - | - | - | - | (8,979) |
| Treasury stock | (765) | - | - | - | - | - | - | - | - | (765) | - |
| Exchange differences arising on consolidation | (48,799) | - | - | - | - | - | - | (24,783) | - | - | (24,016) |
| Fair value reserves (note 43) | 9,464 | - | - | - | - | - | 10,628 | - | - | - | (1,164) |
| Other reserves arising on consolidation (note 43) | (487) | - | - | - | - | - | - | - | (369) | - | (118) |
| Balance on 30 September, 2013 | 3,376,203 | 3,500,000 | 171,175 | 9,853 | - | 223,270 | 13,296 | (2,007,303) | 819,812 | (14,977) | 661,077 |
| Costs related to the share capital increase | (3) | - | - | - | - | - | - | - | (3) | - | - |
| Tax related to costs arising from the share capital increase |
33 | - | - | - | - | - | - | - | 33 | - | - |
| Deferred tax of actuarial losses | |||||||||||
| Gross value Taxes |
(168,686) 180,756 |
- - |
- - |
- - |
- - |
- - |
- - |
(168,686) 180,756 |
- - |
- - |
- - |
| Net (loss) / income for the period attributable | |||||||||||
| to Shareholders of the Bank | (143,124) | - | - | - | - | - | - | - | (143,124) | - | - |
| Net (loss) / income for the period attributable to non-controlling interests (note 45) |
26,362 | - | - | - | - | - | - | - | - | - | 26,362 |
| Dividends of BIM - Banco Internacional de Moçambique, S.A. and SIM - Seguradora |
|||||||||||
| Internacional de Moçambique, S.A.R.L. | 1 | - | - | - | - | - | - | - | - | - | 1 |
| Treasury stock | (7,768) | - | - | - | - | - | - | - | - | (7,768) | - |
| Exchange differences arising on consolidation | 17 | - | - | - | - | - | - | (2,190) | - | - | 2,207 |
| Fair value reserves (note 43) | 11,911 | - | - | - | - | - | 9,015 | - | - | - | 2,896 |
| Other reserves arising on consolidation (note 43) | 106 | - | - | - | - | - | - | - | 48 | - | 58 |
| Balance on 31 December, 2013 | 3,275,808 | 3,500,000 | 171,175 | 9,853 | - | 223,270 | 22,311 | (1,997,423) | 676,766 | (22,745) | 692,601 |
| Share capital decrease (note 41) | - | (2,035,000) | - | - | - | - | - | - | 2,035,000 | - | - |
| Share capital increase (note 41) | 2,241,690 | 2,241,690 | - | - | - | - | - | - | - | - | - |
| Costs related to the share capital increase Tax related to costs arising from the |
(57,201) | - | - | - | - | - | - | - | (57,201) | - | - |
| share capital increase | 13,156 | - | - | - | - | - | - | - | 13,156 | - | - |
| Deferred tax of actuarial losses Gross value |
(733) | - | - | - | - | - | - | (733) | - | - | - |
| Taxes | (10,985) | - | - | - | - | - | - | (10,985) | - | - | - |
| Net (loss) / income for the period attributable | |||||||||||
| to Shareholders of the Bank Net (loss) / income for the period attributable |
(98,257) | - | - | - | - | - | - | - | (98,257) | - | - |
| to non-controlling interests (note 45) | 81,899 | - | - | - | - | - | - | - | - | - | 81,899 |
| Dividends of BIM - Banco Internacional de Moçambique, S.A., SIM - Seguradora Internacional de Moçambique, S.A.R.L. |
|||||||||||
| and Bank Millennium, S.A. | (31,055) | - | - | - | - | - | - | - | - | - | (31,055) |
| Treasury stock | (10,580) | - | - | - | - | - | - | - | - | (10,580) | - |
| Exchange differences arising on consolidation | 40,282 | - | - | - | - | - | - | 23,919 | - | - | 16,363 |
| Fair value reserves (note 43) | 141,753 | - | - | - | - | - | 136,944 | - | - | - | 4,809 |
| Other reserves arising on consolidation (note 43) | (1,175) | - | - | - | - | - | - | - | (1,231) | - | 56 |
| Balance on 30 September, 2014 | 5,584,602 | 3,706,690 | 171,175 | 9,853 | - | 223,270 | 159,255 | (1,985,222) | 2,568,233 | (33,325) | 764,673 |
See accompanying notes to the interim consolidated financial statements
for the nine months period ended 30 September, 2014
| 30 September 2014 | |||||
|---|---|---|---|---|---|
| (Thousands of Euros) | |||||
| Attributable to | |||||
| Continuing operations |
Discontinued operations |
Total | Shareholders of the Bank |
Non-controlling interests |
|
| Items that may be reclassified to the | |||||
| income statement | |||||
| Fair value reserves | 173,614 | 648 | 174,262 | 168,851 | 5,411 |
| Taxes | (32,406) | (103) | (32,509) | (31,907) | (602) |
| 141,208 | 545 | 141,753 | 136,944 | 4,809 | |
| Exchange differences arising on consolidation | 39,287 | 995 | 40,282 | 23,919 | 16,363 |
| 180,495 | 1,540 | 182,035 | 160,863 | 21,172 | |
| Items that will not be reclassified | |||||
| to the income statement | |||||
| Actuarial losses for the period | |||||
| Gross amount | |||||
| BCP Pensions Fund | |||||
| Not related to changes in actuarial assumptions Return of the fund |
212,348 | 329 | 212,677 | 212,677 | - |
| Difference between the expected | |||||
| and the effective obligations | 7,128 | 25 | 7,153 | 7,153 | - |
| Arising from changes in actuarial assumptions | (221,268) | (534) | (221,802) | (221,802) | - |
| (1,792) | (180) | (1,972) | (1,972) | - | |
| Actuarial losses from associated companies | 1,239 | - | 1,239 | 1,239 | - |
| Taxes | (11,025) | 40 | (10,985) | (10,985) | - |
| (11,578) | (140) | (11,718) | (11,718) | - | |
| Other comprehensive (loss) / income after taxes | 168,917 | 1,400 | 170,317 | 149,145 | 21,172 |
| Consolidated net (loss) / income for the period | 17,712 | (34,070) | (16,358) | (98,257) | 81,899 |
| Total comprehensive (loss) / income for the period | 186,629 | (32,670) | 153,959 | 50,888 | 103,071 |
| 30 September 2013 | |||||
|---|---|---|---|---|---|
| (Thousands of Euros) | |||||
| Attributable to | |||||
| Continuing operations |
Discontinued operations |
Total | Shareholders of the Bank |
Non-controlling interests |
|
| Items that may be reclassified to the | |||||
| income statement | |||||
| Fair value reserves Taxes |
(17,509) 27,447 |
(718) 244 |
(18,227) 27,691 |
(16,868) 27,496 |
(1,359) 195 |
| 9,938 | (474) | 9,464 | 10,628 | (1,164) | |
| Exchange differences arising on consolidation | (48,541) | (258) | (48,799) | (24,783) | (24,016) |
| (38,603) | (732) | (39,335) | (14,155) | (25,180) | |
| Items that will not be reclassified to the income statement |
|||||
| Actuarial losses for the period | |||||
| Gross amount | |||||
| BCP Pensions Fund | |||||
| Not related to changes in actuarial assumptions | |||||
| Return of the fund | (46,498) | (134) | (46,632) | (46,632) | - |
| Difference between the expected | |||||
| and the effective obligations | 1,931 | 41 | 1,972 | 1,972 | - |
| (44,567) | (93) | (44,660) | (44,660) | - | |
| Actuarial losses from associated companies | (1,796) | (305) | (2,101) | (2,101) | - |
| Taxes | 1,130 | 18 | 1,148 | 1,148 | - |
| (45,233) | (380) | (45,613) | (45,613) | - | |
| Other comprehensive (loss) / income after taxes | (83,836) | (1,112) | (84,948) | (59,768) | (25,180) |
| Consolidated net (loss) / income for the period | (486,425) | (43,561) | (529,986) | (597,326) | 67,340 |
| Total comprehensive (loss) / income for the period | (570,261) | (44,673) | (614,934) | (657,094) | 42,160 |
| Third quarter 2014 | |||||
|---|---|---|---|---|---|
| (Thousands of Euros) | |||||
| Attributable to | |||||
| Continuing operations |
Discontinued operations |
Total | Shareholders of the Bank |
Non-controlling interests |
|
| Items that may be reclassified to the income statement |
|||||
| Fair value reserves | (32,230) | (151) | (32,381) | (36,808) | 4,427 |
| Taxes | 7,955 | 24 | 7,979 | 8,542 | (563) |
| (24,275) | (127) | (24,402) | (28,266) | 3,864 | |
| Exchange differences arising on consolidation | 53,427 | (450) | 52,977 | 32,073 | 20,904 |
| 29,152 | (577) | 28,575 | 3,807 | 24,768 | |
| Items that will not be reclassified to the income statement |
|||||
| Actuarial losses for the period | |||||
| Actuarial losses from associated companies | (186) | - | (186) | (186) | - |
| Taxes | (4,092) | (1) | (4,093) | (4,093) | - |
| (4,278) | (1) | (4,279) | (4,279) | - | |
| Other comprehensive (loss) / income after taxes | 24,874 | (578) | 24,296 | (472) | 24,768 |
| Consolidated net (loss) / income for the period | (6,242) | (465) | (6,707) | (36,010) | 29,303 |
| Total comprehensive (loss) / income for the period | 18,632 | (1,043) | 17,589 | (36,482) | 54,071 |
| Third quarter 2013 | |||||||
|---|---|---|---|---|---|---|---|
| (Thousands of Euros) | |||||||
| Attributable to | |||||||
| Continuing operations |
Discontinued operations |
Total | Shareholders of the Bank |
Non-controlling interests |
|||
| Items that may be reclassified to the income statement |
|||||||
| Fair value reserves | 43,876 | (99) | 43,777 | 37,776 | 6,001 | ||
| Taxes | 8,527 | 55 | 8,582 | 9,861 | (1,279) | ||
| 52,403 | (44) | 52,359 | 47,637 | 4,722 | |||
| Exchange differences arising on consolidation | (2,228) | (39) | (2,267) | (3,873) | 1,606 | ||
| 50,175 | (83) | 50,092 | 43,764 | 6,328 | |||
| Items that will not be reclassified to the income statement |
|||||||
| Actuarial losses for the period | |||||||
| Taxes | (5,741) | (2) | (5,743) | (5,743) | - | ||
| (5,741) | (2) | (5,743) | (5,743) | - | |||
| Other comprehensive (loss) / income after taxes | 44,434 | (85) | 44,349 | 38,021 | 6,328 | ||
| Consolidated net (loss) / income for the period | (86,399) | 645 | (85,754) | (10,680,746) | 10,594,992 | ||
| Total comprehensive (loss) / income for the period | (41,965) | 560 | (41,405) | (10,642,725) | 10,601,320 |
Banco Comercial Português, S.A. Sociedade Aberta (the 'Bank') is a public bank, established in Portugal in 1985. It started operating on 5 May, 1986, and these consolidated financial statements reflect the results of the operations of the Bank and all its subsidiaries (together referred to as the 'Group') and the Group's interest in associates, for the nine months ended 30 September, 2014 and 2013.
In accordance with Regulation (EC) no. 1606/2002 from the European Parliament and the Council, of 19 July 2002 and Regulation no. 1/2005 from the Bank of Portugal, the Group's consolidated financial statements are required to be prepared in accordance with International Financial Reporting Standards ('IFRS') as endorsed by the European Union ('EU') since the year 2005. IFRS comprise accounting standards issued by the International Accounting Standards Board ('IASB') as well as interpretations issued by the International Financial Reporting Interpretations Committee ('IFRIC') and their predecessor bodies. The consolidated financial statements presented were approved on 21 October 2014 by the Bank's Executive Committee. The financial statements are presented in thousands of Euros, rounded to the nearest thousand.
The consolidated financial statements for the nine months ended 30 September, 2014 were prepared in terms of recognition and measurement in accordance with the IFRS adopted by the EU and effective on that date and the disclosures in accordance with the requirements set by IAS 34. These financial statements also present a statement of the second quarter of 2014 with comparative figures for the second quarter of last year. The financial statements for the nine months ended 30 September, 2014 do not include all the information to be published in the annual financial statements. During the first semester of 2013, the Group sold 100% of the investment in Millennium Bank, Societé Anonyme (Greece), and therefore the referred investment ceased to be consolidated in the financial statements of the Group. This fact should be considered for comparative analyses.
The accounting policies in this note were applied consistently to all entities of the Group and are consistent with those used in the preparation of the financial statements of the previous period, with the changes arising from the adoption of the following standards: IFRS 10 – Consolidated Financial Statements, IFRS 11 – Joint Arrangements, IFRS 12 – Disclosure of Interest in Other Entities, mandatory for accounting periods beginning on or after 1 January, 2014.
IFRS 10 revoked part of IAS 27- Separate Financial Statements and SIC 12 and introduced a new single model of control which determines when an investment should be consolidated. This new model is focus on whether the entity has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns (de facto control).
In accordance with the transitional provisions of IRFS 10, the Group reassessed the control over its investments at 1 January, 2013, and no impact was determined as a result of this reassessment.
IFRS 11 withdraw IAS 31 and SIC 13, defines "joint control" by incorporating the same control model as defined in IFRS 10 and requires an entity that is part of a "join arrangement" to determine the nature of the joint arrangement ("joint operations" or "joint ventures") by assessing its rights and obligations. IFRS 11 removes the option to account for joint ventures using the proportionate consolidation. Instead, joint arrangements that meet the definition of "joint venture" must be account for using the equity method (IAS 28).
The changes introduce by IFRS 11 did not have any impact in the measurement of assets and liabilities of the Group.
IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special vehicles and other off balance sheet vehicles.
The Group's financial statements are prepared under the historical cost convention, as modified by the application of fair value for derivative financial instruments, financial assets and liabilities at fair value through profit or loss and financial assets available for sale, except those for which a reliable measure of fair value is not available. Financial assets and liabilities that are hedged under hedge accounting are stated at fair value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is recognised as the present value of the defined benefit obligation net of the value of the fund.
The preparation of the financial statements in accordance with IFRS requires the Executive Committee to make judgments, estimates and assumptions that affect the application of the accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The issues involving a higher degree of judgment or complexity or for which assumptions and estimates are considered to be significant are presented in note 1 ad).
As from 1 January, 2010, the Group applied IFRS 3 (revised) for the accounting of business combinations. The changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity (de facto control). The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
As from 1 January, 2010, accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can recognise negative non-controlling interests. Previously, when the accumulated losses of a subsidiary attributable to the non-controlling interest exceeded the equity of the subsidiary attributable to the non-controlling interest, the excess was attributed to the Group and charged to the income statement as it occurs. Profits subsequently reported by the subsidiary are recognised as profits of the Group until the prior losses attributable to non-controlling interest previously recognised by the Group have been recovered.
As from 1 January, 2010, on a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously acquired, is booked against the profit and loss account when goodwill is calculated. On a partial disposal resulting in loss of control over a subsidiary, any participation retained is revaluated at market value on the sale date and the gain or loss resulting from this revaluation is booked against the income statement.
Investments in associated companies are consolidated by the equity method from the date that the Group acquires significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group has significant influence when it holds, directly or indirectly, 20% or more of the voting rights of the investee. If the Group holds, directly or indirectly less than 20% of the voting rights of the investee, it is presumed that the Group does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
The consolidated financial statements include the part that is attributable to the Group of the total reserves and results of associated companies accounted on an equity basis. When the Group's share of losses exceeds its interest in the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued except to the extent that the Group has incurred in a legal obligation to assume those losses on behalf of an associate.
Goodwill - Differences arising from consolidation
Goodwill arising from business combinations occurred before 1 January 2004 was charged against reserves.
Business combinations that occurred after 1 January 2004 are accounted under the purchase method. The acquisition cost corresponds to the fair value, determined at the acquisition date, of the assets given and liabilities incurred or assumed including the costs directly attributable to the acquisition, for acquisitions up to 31 December, 2009.
As from 1 January, 2010 onwards, costs directly attributable to the acquisition of a subsidiary are booked directly in the income statement.
As from the transition date to IFRS (1 January 2004), positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to amortisation.
Goodwill arising on the acquisition of subsidiaries and associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising on an acquisition is recognised directly in the income statement in the year the business combination occurs.
The recoverable amount of the goodwill is assessed annually, regardless the existence of any impairment triggers. Impairment losses are recognised in the income statement. The recoverable amount is determined based on the higher between the assets value in use and the market value deducted of selling costs, calculated using valuation methodologies supported by discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
Until 31 December 2009, the contingent acquisition prices were determined based on the best estimate of probable future payments, being the future changes booked against goodwill. As from 1 January 2010, goodwill is no longer adjusted due to changes in the initial estimate of the contingent purchase price and the difference is booked in the income statement, or in equity, when applicable.
Until 31 December, 2009, when an investment in a subsidiary was disposed of, without a loss in control, the difference between the sale price and the book value of the equity allocated to the proportion of capital to be sold by the Group, plus the carrying value of goodwill in that subsidiary, was recognised in the income statement of the period as a gain or loss resulting from the disposal. The dilution effect occurred when the percentage of investment in a subsidiary decreased without any sale of interest in that subsidiary, for example, when the Group did not participate proportionally in a share capital increase of that subsidiary. Until 31 December, 2009, the Group recognised the gains or losses resulting from a dilution of a subsidiary following a sale or capital increase in the income statement.
Also in an acquisition of non-controlling interests, until 31 December 2009, the difference between the acquisition value and the fair value of the noncontrolling interests acquired was accounted against goodwill. The acquisitions of non-controlling interests through written put options related to investments in subsidiaries held by non-controlling interests were recorded as a financial liability for the present value of the best estimate of the amount payable, against non-controlling interests. Any difference between the non-controlling interests acquired and the fair value of the liability was recorded as goodwill. The fair value of the liability was determined based on the contractual price which may be fixed or variable. In case of a variable price, the changes in the liability are recognised against goodwill and the effect of the financial discount of the liability (unwinding) was recognised in the income statement. This accounting treatment is maintained for all options contracted until 31 December 2009.
Since 1 January 2010, the acquisition of the non-controlling interests that does not impact the control position of a subsidiary is accounted as a transaction with shareholders and, therefore, is not recognised additional goodwill resulting from this transaction. The difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in reserves. On this basis, the gains and losses resulting from the sale of non-controlling interests, that does not impact the control position of a subsidiary, are always recognised against reserves.
The gains and losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are recognised by the Group in the income statement.
Similarly, as from 1 January 2010, the acquisitions of non-controlling interests through written put options related with investments in subsidiaries held by non-controlling interests, are recorded as a financial liability for the present value of the best estimate of the amount payable, against non-controlling interests. The fair value of the liability is determined based on the contractual price which may be fixed or variable. In case of a variable price, the changes in the liability are recognised against the income statement as well as the effect of the financial discount of the liability (unwinding). As from 1 January 2010 onwards, in an acquisition (dilution) of non-controlling interests not resulting in a loss of control, the difference between the fair value of the non-controlling interests acquired and the acquisition value, is accounted against reserves.
The financial statements of the foreign subsidiaries and associates of the Group are prepared in their functional currency, defined as the currency of the primary economic environment in which they operate or the currency in which the subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including goodwill, of foreign subsidiaries are converted into euros at the official exchange rate at the balance sheet date. The goodwill existing on these investments is valued against reserves.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods, for exchange differences between the conversion to Euros of the opening net assets at the beginning of the year and their value in Euros at the exchange rate ruling at the balance sheet date for consolidated accounts are charged against consolidated reserves - exchange differences. The exchange differences from hedging instruments related to foreign operations are eliminated from profit and loss in the consolidation process against the exchange differences booked in reserves resulting from those investments. Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the year.
The income and expenses of these subsidiaries are converted to Euros at an approximate rate of the rates ruling at the dates of the transactions. Exchange differences from the conversion to Euros of the profits and losses for the reporting period, arising from the difference between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date, are recognised in reserves - exchange differences.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the investment in the foreign operation and to the associated hedge transaction previously recognised in reserves, are transferred to profit and loss as part of the gains or loss arising from the disposal.
The balances and transactions between Group's companies, or any unrealised gains and losses arising from these transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's investment in the entity.
Loans and advances to customers includes loans and advances originated by the Group which are not intended to be sold in the short term and are recognised when cash is advanced to costumers.
The derecognition of these assets occurs in the following situations: (i) the contractual rights of the Group have expired; or (ii) the Group transferred substantially all the associated risks and rewards.
Loans and advances to customers are initially recognised at fair value plus any directly attributable transaction costs and fees and are subsequently measured at amortised cost using the effective interest method, being presented in the balance sheet net of impairment losses.
The Group's policy consists in a regular assessment of the existence of objective evidence of impairment in the loan portfolios. Impairment losses identified are charged against results and subsequently, if there is a reduction of the estimated impairment loss, the charge is reversed, in a subsequent period.
After the initial recognition, a loan or a loan portfolio, defined as a group of loans with similar credit risk characteristics, can be classified as impaired when there is an objective evidence of impairment as a result of one or more events and when these have an impact on the estimated future cash flows of the loan or of the loan portfolio that can be reliably estimated.
According to IAS 39, there are two basic methods of calculating impairment losses: (i) individually assessed loans; and (ii) collective assessment.
Impairment losses on individually assessed loans are determined by an evaluation of the exposures on a case-by-case basis. For each loan considered individually significant, the Group assesses, at each balance sheet date, the existence of any objective evidence of impairment. In determining such impairment losses on individually assessed loans, the following factors are considered:
Impairment losses are calculated by comparing the present value of the expected future cash flows, discounted at the original effective interest rate of the loan, with its current carrying value, being the amount of any loss charged in the income statement. The carrying amount of impaired loans is reduced through the use of an allowance account. For loans with a variable interest rate, the discount rate used corresponds to the effective annual interest rate, which was applicable in the period that the impairment was determined.
Loans that are not identified as having an objective evidence of impairment are grouped on the basis of similar credit risk characteristics, and assessed collectively.
Impairment losses are calculated on a collective basis under two different scenarios:
for homogeneous groups of loans that are not considered individually significant; or
losses which have been incurred but have not yet been reported (IBNR) on loans for which no objective evidence of impairment is identified (see last paragraph (i)).
The collective impairment loss is determined considering the following factors:
The methodology and assumptions used to estimate the future cash flows are reviewed regularly by the Group in order to monitor the differences between estimated and real losses.
Loans, for which no evidence of impairment has been identified, are grouped together based on similar credit risk characteristics for calculating a collective impairment loss. This analysis allows the Group's recognition of losses whose identification in terms individual only occurs in future periods.
In accordance with "Carta-Circular" no. 15/2009 of the Bank of Portugal, loans and advances to customers are charged-off when there is no realistic expectation, from an economic perspective, of recovering the loan amount. For collateralised loans, the charge-off occurs for the unrecoverable amount when the funds arising from the execution of the respective collaterals, for the part of the loans which is collateralised, is effectively received. This chargeoff is carried out only for loans that are considered not to be recoverable and fully provided.
The financial assets and liabilities acquired or issued with the purpose of sale or re-acquisition on the short term, namely bonds, treasury bills or shares, or that are part of a financial instruments portfolio and for which there is evidence of a recent pattern of short-term profit taking or that can be included in the definition of derivative (except in the case of a derivative classified as hedging) are classified as trading. The dividends associated to these portfolios are accounted in gains arising on trading and hedging activities.
The interest from debt instruments is recognised as net interest income.
Trading derivatives with a positive fair value are included in Financial assets held for trading and the trading derivatives with negative fair value are included in Financial liabilities held for trading.
The Group has adopted the Fair Value Option for certain own bond issues, loans and time deposits that contain embedded derivatives or with related hedging derivatives. The variations of the Group's credit risk related to financial liabilities accounted under the Fair Value Option are disclosed in Net gains / (losses) arising from trading and hedging activities.
The designation of other financial assets and liabilities at fair value through profit and loss is performed whenever at least one of the requirements is fulfilled:
the assets and liabilities are managed, evaluated and reported internally at its fair value;
the designation eliminates or significantly reduces the accounting mismatch of the transactions;
The financial assets and liabilities at Fair Value Option are initially accounted at their fair value, with the expenses or income related to the transactions being recognised in profit and loss and subsequently measured at fair value through profit and loss. The accrual of interest and premium/discount (when applicable) is recognised in Net interest income according to the effective interest rate of each transaction, as well as for accrual of interest of derivatives associated to financial instruments classified as Fair Value Option.
Financial assets available for sale held with the purpose of being maintained by the Group, namely bonds, treasury bills or shares, are classified as available for sale, except if they are classified in another category of financial assets. The financial assets available for sale are initially accounted at fair value, including all expenses or income associated with the transactions. The financial assets available for sale are subsequently measured at fair value. The changes in fair value are accounted for against fair value reserves until they are sold or an impairment loss exists. On disposal of the financial assets available for sale, the accumulated gains or losses recognised as fair value reserves are recognised under Net gains / (losses) arising from available for sale financial assets. Interest income from debt instruments is recognised in Net interest income based on the effective interest rate, including a premium or discount when applicable. Dividends are recognised in the income statement when the right to receive the dividends is attributed.
The financial assets held-to-maturity include non-derivative financial assets with fixed or determinable payments and fixed maturity, for which the Group has the intention and ability to maintain until the maturity of the assets and that were not included in the category of financial assets at fair value through profit and loss or financial assets available for sale. These financial assets are initially recognised at fair value and subsequently measured at amortised cost. The interest is calculated using the effective interest rate method and recognised in Net interest income. The impairment losses are recognised in profit and loss when identified.
Any reclassification or disposal of financial assets included in this category that does not occur close to the maturity of the assets, will require the Group to reclassify the entire portfolio as Financial assets available for sale and the Group will not be allowed to classify any assets under this category for the following two years.
Non-derivative financial assets with fixed or determined payments, that are not quoted in a market and which the Group does not intend to sell immediately or in a near future, may be classified in this category.
In addition to loans granted, the Group recognises in this category unquoted bonds and commercial paper. The financial assets recognised in this category are initially accounted at fair value and subsequently at amortised cost net of impairment. The incremental direct transaction costs are included in the effective interest rate for these financial instruments. The interest accounted based on the effective interest rate method are recognised in Net interest income.
The impairment losses are recognised in profit and loss when identified.
The other financial liabilities are all financial liabilities that are not recognised as financial liabilities at fair value through profit and loss. This category includes money market transactions, deposits from customers and from other financial institutions, issued debt, and other transactions.
These financial liabilities are initially recognised at fair value and subsequently at amortised cost. The related transaction costs are included in the effective interest rate. The interest calculated at the effective interest rate is recognised in Net interest income.
The financial gains or losses calculated at the time of repurchase of other financial liabilities are recognised as Net gains / (losses) from trading and hedging activities, when occurred.
At each balance sheet date, is made an assessment of the existence of objective evidence of impairment. A financial asset or group of financial assets are impaired when there is objective evidence of impairment resulting from one or more events that occurred after its initial recognition, such as: (i) for listed securities, a prolonged devaluation or a significant decrease in its quoted price, and (ii) for unlisted securities, when 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 estimated reasonably. According to the Group's policies, a 30% of depreciation in the fair value of an equity instrument is considered a significant devaluation and the 1 year period is assumed to be a prolonged decrease in the fair value below the acquisition cost.
If an available for sale asset is determined to be impaired, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the profit or loss) is removed from fair value reserves and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurred after the impairment loss was recognised in the profit or loss, the impairment loss is reversed through the income statement. Recovery of impairment losses on equity instruments, classified as financial assets available for sale, is recognised as a gain in fair value reserves when it occurs (if there is no reversal in the income statement).
Embedded derivatives should be accounted for separately as derivatives, if the economic risks and benefits of the embedded derivative are not closely related to the host contract, unless the hybrid (combined) instrument is not initially measured at fair value with changes through profit and loss. Embedded derivatives are classified as trading and recognised at fair value with changes through profit and loss.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance with the hedge accounting model adopted by the Group. A hedge relationship exists when:
at the inception of the hedge there is formal documentation of the hedge;
the hedge is expected to be highly effective;
the hedge is valuable in a continuous basis and highly effective throughout the reporting period; and
for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange arising from monetary assets or liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative and to changes in foreign exchange risk related with the monetary items is recognised through profit and loss.
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the cumulative gains and losses recognised until the discontinuance of the hedge accounting are amortised through profit and loss over the residual period of the hedged item.
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity - cash flow hedge reserves. Any gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect profit or loss.
In case of hedging variability of cash-flows, when the hedge instrument expires or is disposed or when the hedging relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in equity until the date of the discontinued hedge accounting can be:
Deferred over the residual period of the hedged instrument; or
Recognised immediately in results, if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit and loss.
For a hedge relationship to be classified as such according to IAS 39, effectiveness has to be demonstrated. As such, the Group performs prospective tests at the beginning date of the initial hedge, if applicable and retrospective tests in order to demonstrate at each reporting period the effectiveness of the hedging relationships, showing that the changes in the fair value of the hedging instrument are hedged by the changes in the hedged item for the risk being covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss relating to the ineffective portion is immediately recognised in the income statement. Gains and losses accumulated in equity related to the investment in a foreign operation and to the associated hedge operation are included in the income statement on the disposal of the foreign operation as part of the gain or loss from the disposal.
In October 2008, the IASB issued a change to IAS 39 – Reclassification of Financial Assets (Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7: Financial Instruments Disclosures). This change allowed an entity to transfer financial assets from Financial assets at fair value through profit and loss – trading to Financial assets available for sale, to Loans and Receivables - Loans represented by securities or to Financial assets heldto-maturity, as long as the requirements described in the standard are met, namely:
The Group adopted this possibility for a group of financial assets.
Transfers of financial assets recognised in the category of Financial assets available-for-sale to Loans and receivables - Loans represented by securities and to Financial assets held-to-maturity are allowed, in determined and specific circumstances.
Transfers from and to Financial assets and financial liabilities at fair value through profit and loss by decision of the entity (Fair value option) are prohibited.
The Group derecognises financial assets when all rights to future cash flows have expired. In a transfer of assets, derecognition can only occur either when risks and rewards have been substantially transferred or the Group does not maintain control over the assets.
The Group derecognises financial liabilities when these are discharged, cancelled or extinguished.
An instrument is classified as an equity instrument when there is no contractual obligation at settlement to deliver cash or another financial asset to another entity, independently from its legal form, showing a residual interest in the assets of an entity after deducting all of its liabilities.
Transaction costs directly attributable to an equity instruments' issuance are recognised in equity as a deduction to the amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity, net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely at the discretion of the issuer and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the right to receive this income is established and are deducted to equity.
Financial instruments that contain both a liability and an equity component (example: convertible bonds) are classified as compound financial instruments. For those instruments to be considered as compound financial instruments, the terms of its conversion to ordinary shares (number of shares) cannot change with changes in its fair value. The financial liability component corresponds to the present value of the future interest and principal payments, discounted at the market interest rate applicable to similar financial liabilities that do not have a conversion option. The equity component corresponds to the difference between the proceeds of the issue and the amount attributed to the financial liability. Financial liabilities are measured at amortised cost through the effective interest rate method. The interests are recognised in Net interest income.
j) Securities borrowing and repurchase agreement transactions
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral placements in respect of securities borrowed are recognised under loans and advances to either banks or customers. Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over the period of the transactions and are included in interest income or expense (net interest income).
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling agreements in a future date are not recognised on the balance sheet. The amounts paid are recognised in loans and advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these securities are considered as deposits from customers and deposits from credit institutions.
The difference between the acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction and is included in interest income or expenses.
Non-current assets, groups of non-current assets held for sale (groups of assets together and related liabilities that include at least a non current asset) and discontinued operations are classified as held for sale when it is intention to sell the referred assets and liabilities and when the referred assets are available for immediate sale and its sale is highly probable.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly probable.
Immediately before classification as held for sale, the measurement of the non-current assets or all assets and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification, these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short term, are consolidated until the disposal.
The Group also classifies as non-current assets held for sale, the investments arising from recovered loans that are measured initially by the lower of its fair value net of selling costs and the loan's carrying amount on the date that the recovery occurs or the judicial decision is formalised.
The fair value is determined based on the expected selling price estimated through periodic valuations performed by the Group.
The subsequent measurement of these assets is determined based on the lower of the carrying amount and the corresponding fair value less costs to sell. In case of unrealised losses, these should be recognised as impairment losses against results.
l) Finance lease transactions
At the lessee's perspective, finance lease transactions are recorded as an asset and liability at fair value of the leased asset, which is equivalent to the present value of the future lease payments. Lease rentals are a combination of the financial charge and the amortisation of the capital outstanding. The financial charge is allocated to the periods during the lease term to produce a constant periodic rate of interest on the remaining liability balance for each period.
At the lessor's perspective, assets held under finance leases are recorded in the balance sheet as a receivable at an amount equal to the net investment in the lease. Lease rentals are a combination of the financial income and amortization of the capital outstanding. Recognition of the financial result reflects a constant periodical return rate over the remaining net investment of the lessor.
m) Interest income and expense
Interest income and expense for financial instruments measured at amortised cost are recognised in the interest income or expenses (net interest income) through the effective interest rate method. The interest related to financial assets available for sale calculated at the effective interest rate method are also recognised in net interest income as well as those from assets and liabilities at fair value through profit and loss.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial instrument (for example: early payment options) but without considering future impairment losses. The calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and all other premiums or discounts directly related with the transaction, except for assets and liabilities at fair value through profit and loss.
If a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised based on the interest rate used to discount the future cash flows for the purpose of measuring the impairment loss.
Specifically regarding the accounting policy for interest on overdue loans' portfolio, the following aspects are considered:
Interest income for overdue loans with collaterals are accounted for as income, up to the limit of the valuation of the collateral on a prudent basis, in accordance with IAS 18, assuming that there is a reasonable probability of recoverability; and
The interests accrued and not paid for overdue loans for more than 90 days that are not covered by collaterals are written-off and are recognised only when received, in accordance with IAS 18, on the basis that its recoverability is considered to be remote.
For derivative financial instruments, except those classified as hedging instruments of interest rate risk, the interest component is not separated from the changes in the fair value and is classified under Net gains / (losses) from trading and hedging activities. For hedging derivatives of interest rate risk and those related to financial assets or financial liabilities recognised in the Fair Value Option category, the interest component of the changes in their fair value is recognised under interest income or expense (Net interest income).
Fees and commissions are recognised according to the following criteria:
when are earned as services are provided, are recognised in income over the period in which the service is being provided;
when are earned on the execution of a significant act, are recognised as income when the service is completed.
Fees and commissions, that are an integral part of the effective interest rate of a financial instrument, are recognised in net interest income.
o) Financial net gains / losses (Net gains / losses arising from trading and hedging activities, from financial assets available for sale and from financial assets held to maturity)
Financial net gains / losses includes gains and losses arising from financial assets and financial liabilities at fair value through profit and loss, that is, fair value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends received. This caption also includes the impairment losses and gains and losses arising from the sale of available for sale financial assets and financial assets held to maturity. The changes in fair value of hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this caption.
Assets held in the scope of fiduciary activities are not recognised in the Group's consolidated financial statements. Fees and commissions arising from this activity are recognised in the income statement in the period in which they occur.
Property and equipment are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent costs are recognised as a separate asset only when it is probable that future economic benefits will result for the Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in which they are incurred.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated useful life:
| Number of years | |
|---|---|
| Premises | 50 |
| Expenditure on freehold and leasehold buildings | 10 |
| Equipment | 4 to 12 |
| Other fixed assets | 3 |
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount.
The recoverable amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on the present value of future cash-flows estimated to be obtained from the continued use of the asset and its sale at the end of the useful life.
The impairment losses of the fixed tangible assets are recognised in profit and loss.
Real estate properties owned by the investment funds consolidated in the Group, are recognised as Investment properties considering, that the main objective of these buildings is the capital appreciation on a long term basis and not its sale in a short term period, or its maintenance for own use.
These investments are initially recognised at its acquisition cost, including the transaction costs and subsequently revaluated at its fair value. The fair value of the investment property should reflect the market conditions at the balance sheet date. Changes in fair value are recognised in results as Other operating income.
The expertises responsible for the valuation of the assets are properly certified for that purpose, being registered in CMVM.
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the year in which they occur.
Software
The Group's accounts, as intangible assets, the costs associated to software acquired from external entities and depreciates them on a straight line basis by an estimated lifetime of three years. The Group does not capitalise internal costs arising from software development.
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months' maturity from the balance sheet date, including cash and loans and advances to credit institutions.
Cash and cash equivalents exclude restricted balances with Central Banks.
u) Offsetting
Financial assets and liabilities are offset and the net amount is recorded in the balance sheet when the Group has a legally enforceable right to offset the recognised amounts and the transactions are intended to be settled on a net basis.
Transactions in foreign currencies are translated into the respective functional currency of the operation at the foreign exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the respective functional currency of the operation at the foreign exchange rate at the reporting date. Foreign exchange differences arising on translation are recognised in the profit and loss. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into the respective functional currency of the operation at the foreign exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into the respective functional currency of the operation at the foreign exchange rate at the date that the fair value was determined against profit and loss, except for financial assets available-for-sale, for which the difference is recognised against equity.
The Group has the responsibility to pay to their employees' retirement pensions and widow and orphan benefits and permanent disability pensions, in accordance with the agreement entered with the collective labour arrangements. These benefits are estimated in the pension's plans 'Plano ACT' and 'Plano ACTQ' of the Pension Plan of BCP Group, which corresponds to the referred collective labour arrangements (the conditions are estimated in the private social security of the banking sector for the constitution of the right to receive a pension).
Until 2011, along with the benefits provided in two planes above, the Group had assumed the responsibility, under certain conditions in each year, of assigning a complementary plan to the Group's employees hired before 21 September, 2006 (Complementary Plan). The Group at the end of 2012 decided to extinguish ("cut") the benefit of old age Complementary Plan. As at 14 December 2012, the ISP (Portuguese Insurance Institute) formally approved this change benefit plan of the Group with effect from 1 January 2012. The cut of the plan was made, having been assigned to the employees, individual rights acquired. On that date, the Group also proceed to the settlement of the related liability.
From 1 January 2011, banks' employees were integrated in the General Social Security Scheme which now covers their maternity, paternity, adoption and pension benefits. However, the Banks remain liable for those benefits as concern illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employees, replacing the Banking Social Healthcare System ('Caixa de Abono de Família dos Empregados Bancários') which was extinguished by the decree law referred above. As a consequence of this amendment the capability to receive pensions by the actual employees are covered by the General Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The Bank supports the remaining difference for the total pension assured in 'Acordo Colectivo de Trabalho'.
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, was established an agreement between the Government, the Portuguese Banking Association and the Banking Labour Unions in order to transfer, to the Social Security, the liabilities related with pensions currently being paid to pensioners and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31 December 2011 at fixed amounts (discount rate 0%) in the component established in the 'Instrumento de Regulação Colectiva de Trabalho (IRCT)' of the retirees and pensioners. The responsibilities related with the increase in pensions as well as any other complements namely, contributions to the Health System (SAMS), death benefit and death before retirement benefit continued to be under the responsibility of the Financial Institutions and being financed through the corresponding Pensions funds. The Decree-Law also established the terms and conditions under which the transfer was made by setting a discount rate of 4% to determine the liabilities to be transferred.
The Group's net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis at 31 December and 30 June of each year.
The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The benefit is discounted in order to determine its present value, using a discount rate determined by reference to interest rates of high-quality corporate bonds that have maturity dates approximating the terms of the Group's obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's assets.
The income / cost of interests with the pension plan is calculated, by the Group, multiplying the net asset / liability with retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of the retirement pension liabilities, mentioned before. On this basis, the income / cost net of interests includes the interest costs associated with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) gains and losses resulting from differences between actuarial assumptions used and the amounts actually observed (experience gains and losses) and changes in actuarial assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and the amounts obtained, are recognised against equity under other comprehensive income.
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the income / cost net of interest with the pension plan, (iii) the effect of early retirement, (iv ) past service costs and (v) the effects of any settlement or curtailment occurred during the period. The net income / cost with the pension plan is recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of 65.
Employee benefits, other than pension plans, namely post retirement health care benefits and benefits for the spouse and sons for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each Group company according to a certain plan contributions to ensure the solvency of the fund. The minimum level required for the funding is 100% regarding the pension payments and 95% regarding the past services of active employees.
For Defined Contribution Plan, the responsibilities related to the benefits attributed to the Group's employees are recognised as expenses when incurred.
As at 30 September 2014, the Group has two defined contribution plans. One plan covers employees who were hired before 1 July, 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1% of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Português.
The other plan covers employees who have been hired after July 1, 2009. For this plan, designated contributory, monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current month, either by themselves or by the Group and employees.
As at 30 September 2014 there are no share based compensation plans in force.
Variable remuneration paid to employees
The Executive Committee decides on the most appropriate criteria of allocation among employees, whenever it is attributed.
This variable remuneration is charged to income statement in the year to which it relates.
The Group is subject to the regime established by the Income Tax Code ("CIRC"). Additionally, deferred taxes resulting from the temporary differences between the accounting net income and the net income accepted by the Tax Authorities for Income Taxes calculation, are accounted for, whenever there is a reasonable probability that those taxes will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised in the income statement, except when related to items recognised directly in equity, which implies its recognition in equity. Deferred taxes arising from the revaluation of financial assets available for sale and cash flow hedging derivatives are recognised in shareholders' equity and are recognised after in the income statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for goodwill not deductible for tax purposes, differences arising on initial recognition of assets and liabilities that affect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the foreseeable future.
Deferred taxes assets are recognised to the extent when it is probable that future taxable profits, will be available to absorb deductible temporary differences for taxation purposes (including reportable taxable losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i) has a legally enforceable right to set off current tax assets against current tax liabilities; and (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
The Group adopted the IFRS 8 - Operating Segments for the purpose of disclosure financial information by operating segments. A business segment is a Group's component: (i) which develops business activities that can obtain revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking decisions about allocating resources to the segment and assess its performance, and (iii) for which separate financial information is available. The Group controls its activity through the following major operating segments:
Foreign activity
Regarding the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp) on the Bank's Restructuring Plan, in particular the sale of Millennium bcp's operation in Romania in the mid-term and the implementation of a new approach to the assets management business, the activities of Millennium bank in Romania and of Millennium bcp Gestão de Activos were presented on the line item of "income arising from discontinued operations" at 30 September 2013 and at 30 September 2014. At the consolidated balance sheet level, the presentation of assets and liabilities of Millennium bank in Romania and of Millennium bcp Gestão de Activos remained considered as at 30 September 2014 and at 30 September 2013.
Additionally, following the sale of the entire share capital of Millennium bank in Greece, concluded on 19 June 2013, Millennium bank in Greece was classified as a discontinued operation, during 2013, and the results obtained till that date presented on a separate line item in the profit and loss account, defined as "income arising from discontinued operations".
The aggregate Others includes the activity not allocated to the segments mentioned above, namely the developed by subsidiaries in Switzerland and Cayman Islands.
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or published policies that imply the recognition of certain responsibilities), (ii) it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation as a result of past events and (iii) a reliable estimate can be made of the amount of the obligation.
The measurement of provisions takes into account the principles set in IAS 37 regarding the best estimate of the expected cost, the most likely result of current actions and considering the risks and uncertainties inherent in the process result. On the cases that the discount effect is material, provision corresponds to the actual value of the expected future payments, discounted by a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through profit and loss in the proportion of the payments that are probable.
The provisions are derecognised through their use for the obligations for which they were initially accounted or for the cases that the situations were not already observed.
Basic earnings per share are calculated by dividing net income available to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year, excluding the average number of ordinary shares purchased by the Group and held as treasury stock.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider conversion of all dilutive potential ordinary shares, such as convertible debt and stock options granted to employees. Potential or contingent share issues are treated as dilutive when their conversion to shares would decrease net earnings per share.
If the earnings per share are changed as a result of an issue with premium or discount or other event that changed the potential number of ordinary shares or as a result of changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
The Group issues contracts that contain insurance risk, financial risk or a combination of both insurance and financial risk. A contract, under which the Group accepts significant insurance risk from another party, by agreeing to compensate that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with discretionary participating features is classified as an investment contract recognised and measured in accordance with the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial risk, without discretionary participating features, is classified as an investment contract and accounted for as a financial instrument.
Premiums of life insurance and investment contracts with discretionary participating features, which are considered as long-term contracts are recognised when due from the policyholders. The benefits and other costs are recognised concurrently with the recognition of income over the life of the contracts. This specialization is achieved through the establishment of provisions / liabilities of insurance contracts and investment contracts with discretionary participating features.
The responsibilities correspond to the present value of future benefits payable, net of administrative expenses directly associated with the contracts, less the theoretical premiums that would be required to comply with the established benefits and related expenses. The liabilities are determined based on assumptions of mortality, costs of management or investment at the valuation date.
For contracts where the payment period is significantly shorter than the period of benefit, premiums are deferred and recognised as income in proportion to the duration of risk coverage.
Regarding short-term contracts, including contracts of non-life insurance, premiums are recorded at the time of issue. The award is recognised as income acquired in a pro-rata basis during the term of the contract. The provision for unearned premiums represents the amount of premiums on risks not occurred.
Gross premiums written are recognised for as income in the period to which they respect independently from the moment of payment or receivable, in accordance with the accrual accounting principle.
Reinsurance premiums ceded are accounted for as expense in the year to which they respect in the same way as gross premiums written.
The provision for unearned gross premiums is based on the evaluation of the premiums written before the end of the year but for which the risk period continues after the year end. This provision is calculated using the pro-rata temporis method applied to each contract in force.
At each reporting date, the Group evaluates the adequacy of liabilities arising from insurance contracts and investment contracts with discretionary participating features. The evaluation of the adequacy of responsibilities is made based on the projection of future cash flows associated with each contract, discounted at market interest rate without risk. This evaluation is done product by product or aggregate of products when the risks are similar or managed jointly. Any deficiency, if exists, is recorded in the Group's results as determined.
The Banco Comercial Português and Banco ActivoBank are entities authorized by the Insurance Institute of Portugal to practice the activity of insurance intermediation in the category of Online Insurance Broker, in accordance with Article 8., Paragraph a), point i) of Decree-Law n. º 144/2006, of July 31, developing the activity of insurance intermediation in life and non-life.
Within the insurance intermediation services, the banks perform the sale of insurance contracts. As compensation for services rendered for insurance intermediation, the Banks receive commissions for arranging contracts of insurance and investment contracts, which are defined in the agreements / protocols established between the Banks and the Insurance Companies.
Commissions received by insurance intermediation are recognised in accordance with the principle of accrual, so the commissions which payment occurs at different time period to which it relates, are subject to registration as an amount receivable under Other Assets.
IFRS set forth a range of accounting treatments that require the Executive Committee and management to apply judgment and make estimates in deciding which treatment is most appropriate. The most significant of these accounting policies are discussed in this section in order to improve understanding of how their application affects the Group's reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Executive Committee, the Group's reported results would differ if a different treatment was chosen. The Executive Committee believes that the choices made are appropriate and that the financial statements present the Group's financial position and results fairly in all material aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial statements and are not intended to suggest that other alternatives or estimates would be more appropriate.
The Group determines that financial assets available for-sale are impaired when there has been a significant or prolonged decrease in the fair value below its acquisition cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Group evaluates among other factors, the volatility in the prices of the financial assets. According to the Group's policies, 30% of depreciation in the fair value of an equity instrument is considered a significant devaluation and the 1 year period is assumed to be a prolonged decrease in the fair value below the acquisition cost.
In addition, valuations are generally obtained through market quotation or valuation models that may require assumptions or judgment in making estimates of fair value.
Alternative methodologies and the use of different assumptions and estimates could result in a higher level of impairment losses recognised with a consequent impact in the consolidated income statement of the Group.
The Group reviews its loan portfolios to assess impairment losses on a regularly basis, as described in note 1 c).
The evaluation process in determining whether an impairment loss should be recorded in the income statement is subject to numerous estimates and judgments. The probability of default, risk ratings, value of associated collaterals recovery rates and the estimation of both the amount and timing of future cash flows, among other things, are considered in making this evaluation.
Alternative methodologies and the use of different assumptions and estimates could result in a different level of impairment losses with a consequent impact in the consolidated income statement of the Group.
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present value of estimated future cash flows which take into account market conditions for the underlying instruments, time value, yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their values.
Consequently, the use of a different model or of different assumptions or judgments in applying a particular model could result in different financial results for a particular period.
The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-tomaturity. This classification requires significant judgment. In making this judgment, the Group evaluates its intention and ability to hold such investments to maturity.
If the Group fails to keep these investments to maturity other than for the specific circumstances — for example, selling an insignificant amount close to maturity — it will be required to reclassify the entire class as available-for-sale. The investments would therefore be measured at fair value instead of amortised cost.
Held-to-maturity investments are subject to impairment tests made by the Group. The use of different assumptions and estimates could have an impact on the income statement of the Group.
For the purposes of determining entities to include in the consolidation perimeter, the Group assess whether it is exposed to, or has rights to, the variable returns from its involvement with the entity (de facto control).
The decision if an entity needs to be consolidated by the Group requires the use of judgment, estimates and assumptions to determine what extend the Group is exposed to the variable returns and its ability to use its power to affect those returns.
Different estimates and assumptions could lead the Group to a different scope of consolidation perimeter with a direct impact in net income.
The Group is subject to income taxes in numerous jurisdictions. Significant interpretations and estimates are required in determining the worldwide amount for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
Different interpretations and estimates would result in a different level of income taxes, current and deferred, recognised in the year.
The Portuguese Tax Authorities are entitled to review the Bank and its subsidiaries' determination of its annual taxable earnings, for a period of four years or six years in case there are tax losses brought forward. Hence, it is possible that some additional taxes may be assessed, mainly as a result of differences in interpretation of the tax law which for its probability, the Executive Committee considers that there is no relevant material effect at the level of the financial statements.
Determining pension liabilities requires the use of assumptions and estimates, including the use of actuarial projections, estimated returns on investment, and other factors that could impact the cost and liability of the pension plan.
Changes in these assumptions could materially affect these values.
The goodwill recoverable amount recognised as a Group's asset, is revised annually regardless the existence of impairment losses.
For this purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions, applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the cash flows to discount and the discount rate, involves judgment.
IFRS requires separate disclosure of net interest income and net gains arising from trading and hedging activities, from financial assets available for sale and from financial assets held to maturity, as presented in notes 3, 6, 7 and 8. A particular business activity can generate impact in each of these captions, whereby the disclosure requirement demonstrates the contribution of the different business activities for the net interest margin and net gains from trading and hedging, from financial assets available for sale and from financial assets held to maturity.
The amount of this account is comprised of:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Net interest income | 790,954 | 613,757 |
| Net gains / (losses) from trading and hedging assets | 117,725 | 108,890 |
| Net gains / (losses) from financial assets available for sale | 239,432 | 40,761 |
| Net gains / (losses) from financial assets held to maturity | - | (278) |
| 1,148,111 | 763,130 |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Interest and similar income | ||
| Interest on loans and advances | 1,543,586 | 1,644,538 |
| Interest on trading securities | 12,970 | 15,994 |
| Interest on available for sale financial assets | 227,839 | 240,893 |
| Interest on held to maturity financial assets | 89,134 | 91,032 |
| Interest on hedging derivatives | 87,071 | 102,991 |
| Interest on derivatives associated to financial | ||
| instruments through profit and loss account | 19,802 | 2,982 |
| Interest on deposits and other investments | 32,972 | 47,643 |
| 2,013,374 | 2,146,073 | |
| Interest expense and similar charges | ||
| Interest on deposits and inter-bank funding | 695,027 | 897,375 |
| Interest on securities sold under repurchase agreement | 8,031 | 11,410 |
| Interest on securities issued | 284,309 | 354,075 |
| Interest on subordinated debt | ||
| Hybrid instruments eligible as core tier 1 (CoCos) | ||
| underwritten by the Portuguese State | 162,751 | 201,104 |
| Others | 50,222 | 48,224 |
| Interest on hedging derivatives | 11,614 | 15,193 |
| Interest on derivatives associated to financial | ||
| instruments through profit and loss account | 10,466 | 4,935 |
| 1,222,420 | 1,532,316 | |
| 790,954 | 613,757 |
The balance Interest on loans and advances includes the amount of Euros 42,973,000 (30 September 2013: Euros 51,413,000) related to commissions and other gains accounted for under the effective interest method, as referred in the accounting policy described in note 1 m).
The balances Interest on securities issued and Interest on subordinated debt include the amount of Euros 121,870,000 (30 September 2013: Euros 149,281,000) related to commissions and other costs accounted for under the effective interest method, as referred in the accounting policy described in note 1 m).
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Dividends from financial assets available for sale | 5,821 | 1,655 |
| Dividends from financial assets held for trading | 2 | 1 |
| 5,823 | 1,656 |
The balance of Dividends from financial assets available for sale includes dividends and income from investment fund units received during the period.
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Fees and commissions received | ||
| From guarantees | 61,162 | 72,600 |
| From credit and commitments | 1,438 | 777 |
| From banking services | 400,801 | 366,553 |
| From insurance activity | 1,027 | 1,017 |
| From other services | 146,275 | 194,046 |
| 610,703 | 634,993 | |
| Fees and commissions paid | ||
| From guarantees | 24,990 | 52,658 |
| From banking services | 63,830 | 70,189 |
| From insurance activity | 1,111 | 1,074 |
| From other services | 14,561 | 16,318 |
| 104,492 | 140,239 | |
| 506,211 | 494,754 |
The balance Fees and commissions received - From banking services includes the amount of Euros 54,671,000 (30 September 2013: Euros 54,676,000) related to insurance mediation commissions.
The caption Fees and commissions expenses - From guarantees includes the amount of Euros 22,689,000 (30 September 2013: Euros 47,774,000) related to commissions paid relating the issues guaranteed given by the Portuguese State.
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Gains arising on trading and hedging activities | Euros '000 | Euros '000 |
| Foreign exchange activity | 807,324 | 811,208 |
| Transactions with financial instruments recognised | ||
| at fair value through profit and loss account | ||
| Held for trading | ||
| Securities portfolio | ||
| Fixed income | 39,045 | 18,296 |
| Variable income | 281 | 721 |
| Certificates and structured securities issued | 51,816 | 31,988 |
| Derivatives associated to financial | ||
| instruments through profit and loss account | 42,813 | 24,095 |
| Other financial instruments derivatives | 475,498 | 1,210,430 |
| Other financial instruments through profit | ||
| and loss account | 7,399 | 8,064 |
| Repurchase of own issues | 49,848 | 5,306 |
| Hedging accounting | ||
| Hedging derivatives | 68,796 | 64,455 |
| Hedged item | 18,954 | 31,578 |
| Other activity | 25,868 | 25,622 |
| 1,587,642 | 2,231,763 | |
| Losses arising on trading and hedging activities | ||
| Foreign exchange activity | 736,123 | 730,074 |
| Transactions with financial instruments recognised | ||
| at fair value through profit and loss account | ||
| Held for trading | ||
| Securities portfolio | ||
| Fixed income | 5,935 | 20,665 |
| Variable income | 112 | 2,511 |
| Certificates and structured securities issued | 55,582 | 47,791 |
| Derivatives associated to financial | ||
| instruments through profit and loss account | 41,232 | 19,941 |
| Other financial instruments derivatives | 502,450 | 1,097,644 |
| Other financial instruments through profit | ||
| and loss account | 20,282 | 9,443 |
| Repurchase of own issues | 11,575 | 5,303 |
| Hedging accounting | ||
| Hedging derivatives | 36,894 | 97,736 |
| Hedged item | 44,185 | 5,153 |
| Other activity | 15,547 | 86,612 |
| 1,469,917 | 2,122,873 | |
| 117,725 | 108,890 |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Gains arising from financial assets available for sale | ||
| Fixed income | 242,849 | 62,535 |
| Variable income | 4,613 | 256 |
| Losses arising from financial assets available for sale | ||
| Fixed income | (6,525) | (7,100) |
| Variable income | (1,505) | (14,930) |
| 239,432 | 40,761 |
The caption Gains arising from financial assets available for sale - Fixed income - includes, as at 30 September 2014, the amount of Euros 232,295,000 (30 September 2013: Euros 49,999,000) related to gains resulting from the sale of Portuguese public debt.
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Losses arising from financial assets held to maturity | - | (278) |
| - | (278) |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Operating income | ||
| Income from services | 23,315 | 23,940 |
| Cheques and others | 11,235 | 11,003 |
| Other operating income | 1,025 | 3,698 |
| 35,575 | 38,641 | |
| Operating costs | ||
| Indirect taxes | 10,365 | 16,530 |
| Donations and contributions | 3,060 | 3,144 |
| Specific contribution for the banking sector | 28,602 | 25,419 |
| Specific contribution for the resolution fund | 6,019 | 8,671 |
| Other operating expenses | 30,411 | 27,495 |
| 78,457 | 81,259 | |
| (42,882) | (42,618) | |
The caption Specific contribution for the banking sector is estimated according to the terms of the Decree-Law no. 55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core capital (Tier 1) and supplementary (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii) the off-balance notional amount of derivatives.
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Salaries and remunerations | 364,417 | 382,575 |
| Mandatory social security charges | 81,604 | 78,160 |
| Voluntary social security charges | 24,582 | 26,742 |
| Seniority premium | 3,798 | 4,429 |
| Other staff costs | 3,634 | 12,010 |
| 478,035 | 503,916 |
The amount of this account is comprised of:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Water, electricity and fuel | 14,611 | 14,859 |
| Consumables | 4,315 | 4,164 |
| Rents | 86,191 | 93,194 |
| Communications | 21,336 | 22,134 |
| Travel, hotel and representation costs | 6,959 | 6,862 |
| Advertising | 23,214 | 18,454 |
| Maintenance and related services | 21,651 | 22,912 |
| Credit cards and mortgage | 3,186 | 3,523 |
| Advisory services | 8,429 | 11,207 |
| Information technology services | 15,416 | 14,432 |
| Outsourcing | 55,423 | 57,510 |
| Other specialised services | 22,214 | 21,987 |
| Training costs | 1,049 | 925 |
| Insurance | 3,835 | 3,812 |
| Legal expenses | 5,198 | 5,498 |
| Transportation | 8,016 | 7,938 |
| Other supplies and services | 30,157 | 25,988 |
| 331,200 | 335,399 |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Intangible assets: | ||
| Software | 10,433 | 11,551 |
| Other intangible assets | 256 | 120 |
| 10,689 | 11,671 | |
| Property, plant and equipment: | ||
| Land and buildings | 20,144 | 17,316 |
| Equipment | ||
| Furniture | 1,451 | 1,770 |
| Office equipment | 1,681 | 1,819 |
| Computer equipment | 6,207 | 8,340 |
| Interior installations | 1,698 | 1,969 |
| Motor vehicles | 2,915 | 2,522 |
| Security equipment | 1,837 | 1,476 |
| Other equipment | 1,704 | 1,837 |
| Other tangible assets | 1 | - |
| 37,638 | 37,049 | |
| 48,327 | 48,720 |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Loans and advances to credit institutions: | ||
| For overdue loans and credit risks | ||
| Impairment for the period | 2 | 18 |
| Write-back for the period | (4) | - |
| (2) | 18 | |
| Loans and advances to customers: | ||
| For overdue loans and credit risks | ||
| Charge for the period | 1,113,934 | 1,370,859 |
| Write-back for the period | (228,560) | (742,767) |
| Recovery of loans and interest charged-off | (10,834) | (9,467) |
| 874,540 | 618,625 | |
| 874,538 | 618,643 |
The caption Loans impairment is related to an estimate of the incurred losses determined according with the methodology for a regular evaluation of objective evidence of impairment, as described in note 1 c).
Sep 2014 Sep 2013
67,851 161,529
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 |
|---|---|
| Euros '000 | Euros '000 |
| 52,541 | 97,361 |
| 52,541 | 97,361 |
The amount of this account is comprised of:
| Euros '000 | Euros '000 | |
|---|---|---|
| Provision for guarantees and other commitments | ||
| Charge for the period | 46,808 | 67,613 |
| Write-back for the period | (12,268) | (11,013) |
| 34,540 | 56,600 | |
| Other provisions for liabilities and charges | ||
| Charge for the period | 34,511 | 105,926 |
| Write-back for the period | (1,200) | (997) |
| 33,311 | 104,929 |
The main contributions of the investments accounted for under the equity method to the Group's profit are analysed as follows:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Banque BCP, S.A.S. | 2,072 | 2,380 |
| Banque BCP (Luxembourg), S.A. | 42 | (84) |
| Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 27,968 | 38,429 |
| SIBS, S.G.P.S, S.A. | 2,284 | 1,603 |
| Unicre - Instituição Financeira de Crédito, S.A. | 1,299 | 1,921 |
| VSC - Aluguer de Veículos Sem Condutor, Lda. | 517 | (35) |
| Other companies | (5,961) | 2,226 |
| 28,221 | 46,440 |
The amount of this account is comprised of:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Disposal of the investments held in Ocidental - Companhia | ||
| Portuguesa de Seguros, S.A. and in Médis - | ||
| Companhia Portuguesa Seguros de Saúde, S.A. | 69,396 | - |
| Partial disposal of the investment held in | ||
| Banque BCP (Luxembourg), S.A. | - | 859 |
| Other assets | (6,970) | (22,414) |
| 62,426 | (21,555) |
The caption Disposal of the investments held in Ocidental - Companhia Portuguesa de Seguros, S.A. and in Médis - Companhia Portuguesa Seguros de Saúde, S.A. corresponds to the gain generated on the sale of 49% of the investments held in the insurance companies that operate exclusively in the non-life insurance business, as referred in note 47.
The caption Gains / (losses) arising from the sale of subsidiaries and other assets corresponds to the gains and losses arising from the sale and revaluation of assets of the Group classified as non-current assets held for sale.
The caption Partial disposal of the investment held in Banque BCP (Luxembourg) S.A. corresponds to the gain generated on the sale of 10% of the investment held in the associated company, which occurred in June 2013.
| The amount of this account is comprised of: | ||
|---|---|---|
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
| Net (loss) / income before income tax: | ||
| Millennium Bank (Greece) | - | (98,773) |
| Millennium bcp Gestão de Activos - Sociedade Gestora | ||
| de Fundos de Investimento, S.A. | 2,704 | 1,761 |
| Banca Millennium S.A. | (1,291) | (5,424) |
| Impairment Banca Millennium S.A. | (35,000) | - |
| Gain arising from the sale of Millennium Bank (Greece) | - | 32,125 |
| Others | 109 | 367 |
| (33,478) | (69,944) | |
| Taxes: | ||
| Millennium Bank (Greece) | - | 25,254 |
| Millennium bcp Gestão de Activos - Sociedade Gestora | ||
| de Fundos de Investimento, S.A. | (720) | (499) |
| Banca Millennium S.A. | 146 | 1,695 |
| Others | (18) | (67) |
| (592) | 26,383 | |
| (34,070) | (43,561) |
In accordance with accounting policy described in note 1k), with reference at 30 September 2014, the balance Impairment Banca Millennium S.A., corresponds to the impact from the difference between the estimated fair value less cost to sell of the subsidiary in accordance with the available information, and the respectively equity accounted in the consolidated financial statements of the BCP Group. As referred in note 47, the sale of Banca Millennium was formalized at 30 July 2014, depending on the authorizations of the regulatory entities.
The earnings per share are calculated as follows:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net (loss) / income from continuing operations | (64,187) | (553,765) |
| (Loss) / income arising from discontinued operations | (34,070) | (43,561) |
| Net (loss) / income | (98,257) | (597,326) |
| Average number of shares | 38,999,792,529 | 33,959,527,416 |
| Basic earnings per share (Euros): | ||
| from continuing operations | 0,00 | (0.02) |
| from discontinued operations | 0,00 | 0,00 |
| 0,00 - |
(0.02) - |
|
| Diluted earnings per share (Euros) | ||
| from continuing operations | 0,00 | (0.02) |
| from discontinued operations | 0,00 | 0,00 |
| 0,00 | (0.02) |
The Bank's share capital, as at 30 September 2014, amounts to Euros 3,706,690,253.08 and is represented by 54,194,709,415 ordinary, book-entry and nominate shares, without nominal value, which is fully paid.
On 24 July 2014, the Bank registered a share capital increase from Euros 1,465,000,000 to Euros 3,706,690,253.08 through the issuance of new 34,487,542,355 ordinary, book-entry and nominate shares, without nominal value, which were offered to the Bank's shareholders for subscription through the exercise of their pre-emptive subscription rights.
In June 2014, the Bank had registered a decrease of the share capital from Euros 3,500,000,000 to Euros 1,465,000,000 without changing the number of existing shares without nominal value.
This balance is analysed as follows:
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Cash | 568,859 | 679,700 |
| Central Banks | ||
| Bank of Portugal | 474,289 | 1,162,198 |
| Central Banks abroad | 714,057 | 1,097,765 |
| 1,757,205 | 2,939,663 |
The balance Central Banks includes deposits with Central Banks of the countries where the group operates in order to satisfy the legal requirements to maintain a cash reserve calculated based on the value of deposits and other liabilities. The cash reserve requirements, according to the European Central Bank System for Euro Zone, establishes the maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities, during each reserve requirement period. The rate is different for countries outside the Euro Zone.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Credit institutions in Portugal | 50,933 | 6,027 |
| Credit institutions abroad | 450,813 | 850,029 |
| Amounts due for collection | 221,004 | 197,974 |
| 722,750 | 1,054,030 |
The balance Amounts due for collection represents essentially cheques due for collection on other financial institutions.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Central Banks abroad | 40,623 | 262,267 |
| Credit institutions in Portugal | 1,573 | 36,913 |
| Credit institutions abroad | 869,897 | 941,650 |
| 912,093 | 1,240,830 | |
| Impairment for other loans and advances to | ||
| credit institutions | (86) | (202) |
| 912,007 | 1,240,628 |
The changes occurred in impairment for other loans and advances to credit institutions are analysed as follows:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 202 | 2,358 |
| Transfers | (114) | (310) |
| Impairment for the period | 2 | 18 |
| Write-back for the period | (4) | - |
| Loans charged-off | - | (1,811) |
| Exchange rate differences | - | (21) |
| Balance on 30 September | 86 | 234 |
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Public sector | 1,360,280 | 1,213,574 |
| Asset-backed loans | 32,619,627 | 35,507,371 |
| Personal guaranteed loans | 9,523,869 | 9,134,948 |
| Unsecured loans | 3,089,194 | 2,861,931 |
| Foreign loans | 2,483,831 | 2,630,179 |
| Factoring | 1,465,058 | 1,120,635 |
| Finance leases | 3,276,373 | 3,347,879 |
| 53,818,232 | 55,816,517 | |
| Overdue loans - less than 90 days | 112,722 | 125,202 |
| Overdue loans - Over 90 days | 4,421,389 | 4,280,537 |
| 58,352,343 | 60,222,256 | |
| Impairment for credit risk | (3,543,947) | (3,420,059) |
| 54,808,396 | 56,802,197 |
As at 30 September 2014, the balance Loans and advances to customers includes the amount of Euros 13,036,901,000 (31 December 2013: Euros 13,218,648,000) regarding mortgage loans which are allocated as a collateral for seven asset-back securities, issued by the Group.
The Group, as part of the liquidity risk management, holds a pool of eligible assets that can serve as collateral in funding operations with the European Central Bank and other Central Banks in countries where the Group operates, which include loans and advances to customers.
The analysis of loans and advances to customers, by type of credit, is as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Loans not represented by securities | ||
| Discounted bills | 328,286 | 371,637 |
| Current account credits | 2,577,526 | 2,605,813 |
| Overdrafts | 1,933,188 | 1,833,990 |
| Loans | 15,692,330 | 16,862,327 |
| Mortgage loans | 26,427,325 | 27,367,062 |
| Factoring | 1,465,058 | 1,120,635 |
| Finance leases | 3,276,373 | 3,347,879 |
| 51,700,086 | 53,509,343 | |
| Loans represented by securities | ||
| Commercial paper | 1,780,203 | 1,829,560 |
| Bonds | 337,943 | 477,614 |
| 2,118,146 | 2,307,174 | |
| 53,818,232 | 55,816,517 | |
| Overdue loans - less than 90 days | 112,722 | 125,202 |
| Overdue loans - Over 90 days | 4,421,389 | 4,280,537 |
| 58,352,343 | 60,222,256 | |
| Impairment for credit risk | (3,543,947) | (3,420,059) |
| 54,808,396 | 56,802,197 |
The analysis of loans and advances to customers, by sector of activity, is as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 432,627 | 390,165 |
| Mining | 187,134 | 177,689 |
| Food, beverage and tobacco | 528,913 | 509,340 |
| Textiles | 481,810 | 454,475 |
| Wood and cork | 220,481 | 209,747 |
| Paper, printing and publishing | 194,754 | 231,682 |
| Chemicals | 672,105 | 617,703 |
| Machinery, equipment and basic metallurgical | 1,019,151 | 985,780 |
| Electricity, water and gas | 1,126,944 | 1,191,942 |
| Construction | 4,361,354 | 4,502,979 |
| Retail business | 1,258,317 | 1,259,196 |
| Wholesale business | 2,215,622 | 2,059,034 |
| Restaurants and hotels | 1,231,550 | 1,301,132 |
| Transports and communications | 1,976,994 | 2,362,520 |
| Services | 11,283,737 | 12,427,129 |
| Consumer credit | 3,950,391 | 3,583,050 |
| Mortgage credit | 25,973,561 | 26,603,015 |
| Other domestic activities | 10,592 | 6,841 |
| Other international activities | 1,226,306 | 1,348,837 |
| 58,352,343 | 60,222,256 | |
| Impairment for credit risk | (3,543,947) | (3,420,059) |
| 54,808,396 | 56,802,197 |
Loans and advances to customers includes the effect of traditional securitization transactions owned by Special Purpose Entities (SPEs) consolidated following the application of IFRS 10, in accordance with accounting policy 1 b) and synthetic securitization.
Securitization transactions engaged by BCP Group refer to mortgage loans, consumer loans, leases, commercial paper and corporate loans. The securitization transactions are set through specifically created SPE. As referred in accounting policy 1 b), when the substance of the relationships with the SPEs indicates that the Group holds control of its activities, the SPE are fully consolidated.
The balance Loans and advances to customers includes the following amounts related to securitization transactions, presented by type of transaction:
| Traditional | ||
|---|---|---|
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
| Mortgage loans | 654,859 | 697,184 |
| Consumer loans | - | 108,932 |
| Leases | - | 509,735 |
| Corporate loans | - | 2,122,436 |
| 654,859 | 3,438,287 |
The balance Loans and advances to customers includes the following amounts related to finance leases contracts: Magellan Mortgages No. 3
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Gross amount | 3,782,942 | 3,882,683 |
| Interest not yet due | (506,569) | (534,804) |
| Net book value | 3,276,373 | 3,347,879 |
The loans to customers' portfolio includes contracts that resulted in a formal restructuring with the customers and the consequent establishment of a new funding to replace the previous. The restructuring may result in a reinforce of guarantees and / or liquidation of part of the credit and involve an extension of maturities or a different interest rate. The analysis of restructured loans, by sector of activity, is as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 17,960 | 2,599 |
| Mining | 197 | 121 |
| Food, beverage and tobacco | 2,648 | 2,560 |
| Textiles | 475 | 590 |
| Wood and cork | 908 | 1,159 |
| Paper, printing and publishing | 575 | 912 |
| Chemicals | 967 | 994 |
| Machinery, equipment and basic metallurgical | 27,009 | 26,716 |
| Electricity, water and gas | 2,197 | 1,400 |
| Construction | 23,858 | 17,607 |
| Retail business | 3,866 | 3,577 |
| Wholesale business | 27,123 | 39,980 |
| Restaurants and hotels | 1,584 | 1,875 |
| Transports and communications | 6,105 | 8,366 |
| Services | 15,915 | 185,524 |
| Consumer credit | 86,806 | 116,379 |
| Mortgage credit | 56,788 | 53,462 |
| Other domestic activities | 12 | 79 |
| Other international activities | 14,246 | 876 |
| 289,239 | 464,776 |
The restructured loans are subject to an impairment analysis resulting from the revaluation of expectation to meet new cash flows inherent to the new contract terms, discounted at the original effective interest rate and considering new collaterals.
The analysis of overdue loans, by sector of activity, is as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 22,524 | 22,633 |
| Mining | 9,710 | 9,539 |
| Food, beverage and tobacco | 25,517 | 31,196 |
| Textiles | 43,200 | 47,020 |
| Wood and cork | 36,816 | 43,702 |
| Paper, printing and publishing | 15,025 | 25,527 |
| Chemicals | 69,451 | 69,425 |
| Machinery, equipment and basic metallurgical | 87,329 | 76,940 |
| Electricity, water and gas | 14,882 | 12,943 |
| Construction | 1,227,609 | 1,235,057 |
| Retail business | 193,560 | 213,555 |
| Wholesale business | 237,507 | 240,213 |
| Restaurants and hotels | 284,949 | 229,188 |
| Transports and communications | 110,591 | 84,514 |
| Services | 1,178,399 | 1,096,002 |
| Consumer credit | 678,899 | 643,137 |
| Mortgage credit | 268,144 | 246,406 |
| Other domestic activities | 10,566 | 6,792 |
| Other international activities | 19,433 | 71,950 |
| 4,534,111 | 4,405,739 |
The changes occurred in impairment for credit risk are analysed as follows:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 3,420,059 | 4,242,725 |
| Transfers resulting from changes in the | ||
| Group's structure | 37,572 | (891,061) |
| Other transfers | (36,916) | (31,846) |
| Impairment for the period | 1,113,934 | 1,370,859 |
| Write-back for the period | (228,560) | (742,767) |
| Loans charged-off | (770,947) | (451,824) |
| Exchange rate differences | 8,805 | (15,282) |
| Balance on 30 September | 3,543,947 | 3,480,804 |
If the impairment loss decreases in a subsequent period to its initial accounting and this decrease can be objectively associated to an event that occurred after the recognition of the loss, the impairment in excess is reversed through profit and loss.
The analysis of impairment, by sector of activity, is as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 37,661 | 33,194 |
| Mining | 9,875 | 8,517 |
| Food, beverage and tobacco | 22,769 | 21,787 |
| Textiles | 24,278 | 22,470 |
| Wood and cork | 29,144 | 28,363 |
| Paper, printing and publishing | 15,152 | 38,544 |
| Chemicals | 57,118 | 37,349 |
| Machinery, equipment and basic metallurgical | 57,895 | 54,644 |
| Electricity, water and gas | 9,073 | 6,635 |
| Construction | 730,410 | 722,895 |
| Retail business | 126,933 | 121,375 |
| Wholesale business | 192,675 | 161,330 |
| Restaurants and hotels | 163,151 | 117,792 |
| Transports and communications | 105,640 | 99,748 |
| Services | 1,029,169 | 1,080,805 |
| Consumer credit | 523,987 | 442,295 |
| Mortgage credit | 348,360 | 274,156 |
| Other domestic activities | 38,181 | 20,252 |
| Other international activities | 22,476 | 127,908 |
| 3,543,947 | 3,420,059 |
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 870 | 420 |
| Mining | 275 | 254 |
| Food, beverage and tobacco | 6,936 | 1,597 |
| Textiles | 5,576 | 5,403 |
| Wood and cork | 11,102 | 12,241 |
| Paper, printing and publishing | 26,309 | 540 |
| Chemicals | 3,154 | 19,345 |
| Machinery, equipment and basic metallurgical | 11,087 | 36,836 |
| Electricity, water and gas | 2 | 63 |
| Construction | 183,564 | 53,584 |
| Retail business | 33,164 | 4,481 |
| Wholesale business | 32,153 | 28,321 |
| Restaurants and hotels | 13,073 | 5,510 |
| Transports and communications | 15,879 | 7,746 |
| Services | 342,340 | 157,353 |
| Consumer credit | 79,369 | 56,558 |
| Mortgage credit | 4,292 | 720 |
| Other domestic activities | 738 | 784 |
| Other international activities | 1,064 | 60,068 |
| 770,947 | 451,824 |
The analysis of recovered loans and interest, during the first nine months of 2014 and 2013, by sector of activity, is as follows:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 90 | 5 |
| Food, beverage and tobacco | 87 | 69 |
| Textiles | 222 | 135 |
| Wood and cork | 146 | 186 |
| Paper, printing and publishing | 128 | 393 |
| Chemicals | 70 | 120 |
| Machinery, equipment and basic metallurgical | 1,241 | 57 |
| Electricity, water and gas | 25 | - |
| Construction | 1,022 | 2,603 |
| Retail business | 617 | 152 |
| Wholesale business | 910 | 915 |
| Restaurants and hotels | 202 | 169 |
| Transports and communications | 215 | 56 |
| Services | 734 | 235 |
| Consumer credit | 4,817 | 3,408 |
| Mortgage credit | - | 735 |
| Other domestic activities | 169 | 217 |
| Other international activities | 59 | 12 |
| 10,834 | 9,467 |
The balance Financial assets held for trading and available for sale is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Bonds and other fixed income securities | ||
| Issued by public entities | 5,867,509 | 6,236,367 |
| Issued by other entities | 2,838,302 | 2,339,516 |
| 8,705,811 | 8,575,883 | |
| Overdue securities | 4,083 | 4,927 |
| Impairment for overdue securities | (4,077) | (4,925) |
| 8,705,817 | 8,575,885 | |
| Shares and other variable income securities | 1,464,306 | 1,203,203 |
| 10,170,123 | 9,779,088 | |
| Trading derivatives | 1,066,709 | 838,111 |
| 11,236,832 | 10,617,199 |
The portfolio of financial instruments held for trading and available for sale securities, net of impairment, is analysed as follows:
| Sep 2014 | Dec 2013 | |||||
|---|---|---|---|---|---|---|
| Securities | Securities | |||||
| Available | Available | |||||
| Trading | for sale | Total | Trading | for sale | Total | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Fixed income: | ||||||
| Bonds issued by public entities | ||||||
| Portuguese issuers | 191,829 | 2,045,130 | 2,236,959 | 180,611 | 1,683,197 | 1,863,808 |
| Foreign issuers | 303,800 | 1,639,435 | 1,943,235 | 177,530 | 1,521,656 | 1,699,186 |
| Bonds issued by other entities | ||||||
| Portuguese issuers | 290 | 774,995 | 775,285 | 58 | 395,311 | 395,369 |
| Foreign issuers | 87,664 | 1,678,977 | 1,766,641 | 81,292 | 1,217,431 | 1,298,723 |
| Treasury bills and other | ||||||
| Government bonds | - | 1,687,315 | 1,687,315 | - | 2,673,373 | 2,673,373 |
| Commercial paper | - | 300,459 | 300,459 | - | 650,351 | 650,351 |
| 583,583 | 8,126,311 | 8,709,894 | 439,491 | 8,141,319 | 8,580,810 | |
| Impairment for overdue securities | - | (4,077) | (4,077) | - | (4,925) | (4,925) |
| 583,583 | 8,122,234 | 8,705,817 | 439,491 | 8,136,394 | 8,575,885 | |
| Variable income: | ||||||
| Shares in Portuguese companies | 9,266 | 79,559 | 88,825 | 9,275 | 61,257 | 70,532 |
| Shares in foreign companies | 414 | 25,613 | 26,027 | 64 | 22,241 | 22,305 |
| Investment fund units | 1,236 | 1,346,194 | 1,347,430 | 1,371 | 1,107,228 | 1,108,599 |
| Other securities | 2,024 | - | 2,024 | 1,767 | - | 1,767 |
| 12,940 | 1,451,366 | 1,464,306 | 12,477 | 1,190,726 | 1,203,203 | |
| Trading derivatives | 1,066,709 | - | 1,066,709 | 838,111 | - | 838,111 |
| 1,663,232 | 9,573,600 | 11,236,832 | 1,290,079 | 9,327,120 | 10,617,199 |
The trading and available for sale portfolios, are recorded at fair value in accordance with the accounting policy described in note 1 d).
As referred in the accounting policy presented in note 1 d), the available for sale securities are presented at market value with the respective fair value accounted against fair value reserves, as referred in note 43. As at 30 September 2014, the amount of fair value reserves of Euros 245,701,000 (31 December 2013: Euros 79,599,000) is presented net of impairment losses in the amount of Euros 192,767,000 (31 December 2013: Euros 146,610,000).
The analysis of financial assets held for trading and available for sale by sector of activity, as at 30 September 2014 is as follows:
| Sep 2014 | |||||
|---|---|---|---|---|---|
| Bonds Euros '000 |
Shares Euros '000 |
Other Financial Assets Euros '000 |
Overdue Securities Euros '000 |
Total Euros '000 |
|
| Food, beverage and tobacco | - | - | - | 6 | 6 |
| Textiles | - | 5,000 | - | 361 | 5,361 |
| Wood and cork | - | 501 | - | 998 | 1,499 |
| Paper, printing and publishing | 13,051 | 41 | - | - | 13,092 |
| Chemicals | - | 10 | - | - | 10 |
| Machinery, equipment and basic metallurgical | - | 551 | - | - | 551 |
| Electricity, water and gas | - | 8 | - | - | 8 |
| Construction | - | 952 | - | - | 952 |
| Retail business | - | 330 | - | 2,540 | 2,870 |
| Wholesale business | - | 1,618 | - | - | 1,618 |
| Restaurants and hotels | - | 72 | - | 176 | 248 |
| Transport and communications | 366,871 | 35,800 | - | - | 402,671 |
| Services | 2,458,380 | 69,963 | 1,347,428 | 2 | 3,875,773 |
| Other international activities | - | 6 | 2,026 | - | 2,032 |
| 2,838,302 | 114,852 | 1,349,454 | 4,083 | 4,306,691 | |
| Government and Public securities | 4,180,194 | - | 1,687,315 | - | 5,867,509 |
| Impairment for overdue securities | - | - | - | (4,077) | (4,077) |
| 7,018,496 | 114,852 | 3,036,769 | 6 | 10,170,123 |
The analysis of financial assets held for trading and available for sale by sector of activity as at 31 December 2013 is as follows:
| Dec 2013 | |||||
|---|---|---|---|---|---|
| Other | |||||
| Financial | Overdue | ||||
| Bonds | Shares | Assets | Securities | Total | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Food, beverage and tobacco | - | - | - | 2 | 2 |
| Textiles | - | 5,000 | - | 361 | 5,361 |
| Wood and cork | - | 501 | - | 998 | 1,499 |
| Paper, printing and publishing | 12,822 | 36 | - | - | 12,858 |
| Chemicals | - | 5 | - | - | 5 |
| Machinery, equipment and basic metallurgical | - | 7 | - | - | 7 |
| Electricity, water and gas | - | 6 | - | - | 6 |
| Construction | - | 1,656 | - | 2,560 | 4,216 |
| Wholesale business | - | 1,356 | - | 475 | 1,831 |
| Restaurants and hotels | - | 94 | - | - | 94 |
| Transport and communications | 169,466 | 11,216 | - | 529 | 181,211 |
| Services | 2,156,853 | 72,953 | 1,108,599 | 2 | 3,338,407 |
| Other domestic activities | 375 | - | - | - | 375 |
| Other international activities | - | 7 | 1,767 | - | 1,774 |
| 2,339,516 | 92,837 | 1,110,366 | 4,927 | 3,547,646 | |
| Government and Public securities | 3,562,994 | - | 2,673,373 | - | 6,236,367 |
| Impairment for overdue securities | - | - | - | (4,925) | (4,925) |
| 5,902,510 | 92,837 | 3,783,739 | 2 | 9,779,088 |
The Group, as part of the management process of the liquidity risk, holds a pool of eligible assets that can serve as collateral in funding operations in the European Central Bank and other Central Banks in countries were the Group operates, which includes fixed income securities.
| This balance is analysed as follows: | ||||
|---|---|---|---|---|
| Sep 2014 | Dec 2013 | |||
| Assets | Liabilities | Assets | Liabilities | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Hedging instruments | ||||
| Swaps | 72,385 | 263,608 | 104,503 | 243,373 |
| 72,385 | 263,608 | 104,503 | 243,373 |
The balance Financial assets held to maturity is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Bonds and other fixed income securities | ||
| Issued by Government and public entities | 1,908,112 | 2,095,199 |
| Issued by other entities | 816,071 | 1,015,131 |
| 2,724,183 | 3,110,330 |
The analysis of Bonds and other fixed income securities portfolio, net of impairment, included in Financial assets held to maturity, by sector of activity, is analysed as follows:
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Transport and communications | 174,360 | 171,457 |
| Services | 641,711 | 843,674 |
| 816,071 | 1,015,131 | |
| Government and Public securities | 1,908,112 | 2,095,199 |
| 2,724,183 | 3,110,330 |
As part of the management process of the liquidity risk, the Group holds a pool of eligible assets that can be used as collateral in funding operations with the European Central Bank and other Central Banks in countries were the Group operates, which include fixed income securities,
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Portuguese credit institutions | 29,777 | 29,273 |
| Foreign credit institutions | 29,208 | 27,094 |
| Other Portuguese companies | 390,869 | 515,307 |
| Other foreign companies | 7,532 | 7,216 |
| 457,386 | 578,890 |
The balance Investments in associated companies is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Banque BCP, S.A.S. | 26,781 | 24,710 |
| Banque BCP (Luxembourg), S.A. | 2,427 | 2,384 |
| Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 372,015 | 497,301 |
| SIBS, S.G.P.S, S.A. | 17,499 | 15,457 |
| Unicre - Instituição Financeira de Crédito, S.A. | 29,777 | 29,273 |
| Other | 8,887 | 9,765 |
| 457,386 | 578,890 |
These investments correspond to unquoted companies. According to the accounting policy described in note 1 b), these investments are consolidated by the equity method. The investment held in the associated company Millenniumbcp Ageas Grupo Segurador, S.G.P.S. corresponds to 49% of the share capital of the Group. The Group's companies included in the consolidation perimeter are presented in note 49.
This balance is analysed as follows:
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Subsidiaries acquired exclusively with the purpose of | ||
| short-term sale | 91,772 | 48,872 |
| Investments, properties and other assets arising | ||
| from recovered loans | 1,823,939 | 1,830,254 |
| 1,915,711 | 1,879,126 | |
| Impairment | (325,056) | (372,695) |
| 1,590,655 | 1,506,431 |
The assets included in this balance are accounted for in accordance with the accounting policy note 1 k).
The balance Investments, properties and other assets arising from recovered loans includes assets resulting from (i) foreclosure, with an option to repurchase or leaseback, which are accounted following the establishment of the contract or the promise of contract and the respective irrevocable power of attorney issued by the client on behalf of the Bank, or (ii) resolution of leasing contracts.
These assets are available for sale in a period less than one year and the Bank has a strategy for its sale. However, taking into account the actual market conditions, it was not possible in all instances to conclude the sales in the expected time.
The strategy of alienation results in an active search of buyers, with the Bank having a website that advertises these properties, contracts with intermediaries for sales promotion and sales initiatives in real estate auctions. Prices are periodically reviewed and adjusted for continuous adaptation to the market.
The referred balance includes buildings and other assets for which the Group has already established contracts for the sale in the amount of Euros 17,128,000 (31 December 2013: Euros 28,875,000).
On 30 September 2014, the balance Investments, properties and other assets arising from recovered loans includes the amount of Euros 363,567,000 (31 December 2013: Euros 347,000,000) related to properties of Closed Real Estate Investment Funds, whose units were received following foreclosure operations and in accordance with IFRS, were subject to full consolidation method.
As mentioned in note 29, during 2013, a set of Fund's property assets that were previously classified as investment property has been transferred to Non-current assets held for sale, following the redefinition of the value of these assets recovery strategy, which will be perspective be materialized through its sale.
The balance Subsidiaries acquired exclusively with the view of short-term sale corresponds to three real estate companies acquired by the Group within the restructuring of a loan exposure that the Group intends to sell in less than one year. However, taking into account the actual market conditions, it was not possible to conclude the sales in the expected time. Until the date of the sale, the Group continues to consolidate in reserves and income, any changes occurred in the net assets of the subsidiaries.
The balance Investment property includes the amount of Euros 177,629,000 (31 December 2013: Euros 193,921,000) related to real estate accounted in the "Fundo de Investimento Imobiliário Imosotto Acumulação", "Fundo de Investimento Imobiliário Gestão Imobiliária", "Fundo de Investimento Imobiliário Imorenda", "Fundo de Investimento Imobiliário Fechado Gestimo" and "Imoport - Fundo de Investimento Imobiliário Fechado", which are consolidated under the full consolidation method as referred in the accounting policy presented in note 1 b).
The real estate is evaluated in accordance with the accounting policy presented in note 1 r), based on independent assessments and compliance with legal requirements.
During 2013, the change occurred in the caption Investment properties, as mentioned in note 28, included the effect of the transfer of a set funds' property assets to Non-current assets held for sale following the redefinition of the recovery strategy of the value of these assets.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Land and buildings | 1,178,400 | 1,045,251 |
| Equipment | ||
| Furniture | 90,409 | 89,524 |
| Machines | 58,775 | 56,729 |
| Computer equipment | 297,732 | 294,511 |
| Interior installations | 146,323 | 143,985 |
| Motor vehicles | 25,124 | 22,949 |
| Security equipment | 86,821 | 84,917 |
| Other equipment | 34,545 | 33,526 |
| Work in progress | 20,354 | 107,742 |
| Other tangible assets | 543 | 435 |
| 1,939,026 | 1,879,569 | |
| Accumulated depreciation | ||
| Charge for the period | (37,638) | (52,897) |
| Accumulated charge for the previous periods | (1,126,457) | (1,094,109) |
| (1,164,095) | (1,147,006) |
774,931 732,563
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Intangible assets | ||
| Software | 114,255 | 121,628 |
| Other intangible assets | 55,804 | 55,878 |
| 170,059 | 177,506 | |
| Accumulated depreciation | ||
| Charge for the period | (10,689) | (15,226) |
| Accumulated charge for the previous periods | (125,668) | (125,747) |
| (136,357) | (140,973) | |
| 33,702 | 36,533 | |
| Goodwill | ||
| Bank Millennium, S.A. (Poland) | 164,040 | 164,040 |
| Real estate and mortgage credit | 40,859 | 40,859 |
| Unicre - Instituição Financeira de Crédito, S.A. | 7,436 | 7,436 |
| Others | 18,780 | 18,609 |
| 231,115 | 230,944 | |
| Impairment | ||
| Others | (16,706) | (16,562) |
| (16,706) | (16,562) | |
| 214,409 | 214,382 | |
| 248,111 | 250,915 |
Deferred income tax assets and liabilities generated by tax losses and by temporary differences are analysed as follows:
| Sep 2014 | Dec 2013 | ||||||
|---|---|---|---|---|---|---|---|
| Assets Euros '000 |
Liabilities Euros '000 |
Net Euros '000 |
Assets Euros '000 |
Liabilities Euros '000 |
Net Euros '000 |
||
| Intangible assets | 46 | - | 46 | 58 | - | 58 | |
| Other tangible assets | 8,084 | 4,158 | 3,926 | 7,448 | 4,232 | 3,216 | |
| Impairment losses | 1,268,038 | 3,517 | 1,264,521 | 1,090,690 | 2,132 | 1,088,558 | |
| Benefits to employees | 724,958 | - | 724,958 | 795,543 | - | 795,543 | |
| Financial assets available for sale | 6,228 | 55,020 | (48,792) | 5,894 | 36,334 | (30,440) | |
| Derivatives | - | 1,517 | (1,517) | - | 1,311 | (1,311) | |
| Allocation of profits | 73,684 | - | 73,684 | 76,937 | - | 76,937 | |
| Tax losses carried forward | 385,742 | - | 385,742 | 256,241 | - | 256,241 | |
| Others | 38,706 | 38,948 | (242) | 29,897 | 43,595 | (13,698) | |
| Total deferred taxes | 2,505,486 | 103,160 | 2,402,326 | 2,262,708 | 87,604 | 2,175,104 | |
| Offset between deferred tax assets | |||||||
| and deferred tax liabilities | (95,752) | (95,752) | - | (81,303) | (81,303) | - | |
| Net deferred taxes | 2,409,734 | 7,408 | 2,402,326 | 2,181,405 | 6,301 | 2,175,104 |
The impact of income taxes in Net (loss) / income and in other captions of Group's equity, as at 30 September 2014, is analysed as follows:
| Sep 2014 | |||||||
|---|---|---|---|---|---|---|---|
| Net (loss) / income Euros '000 |
Reserves and retained earnings Euros '000 |
Exchange differences Euros '000 |
Discontinued operations Euros '000 |
||||
| Deferred taxes | |||||||
| Intangible assets | - | - | - | (12) | |||
| Other tangible assets | 716 | (50) | 38 | 7 | |||
| Impairment losses | 177,381 | 1,563 | (2,975) | (7) | |||
| Benefits to employees | (23,999) | (45,762) | (764) | (60) | |||
| Financial assets available for sale | - | (20,176) | 1,954 | (131) | |||
| Allocation of profits | (3,252) | - | - | - | |||
| Derivatives | (213) | 1,447 | (1,441) | - | |||
| Tax losses carried forward | 94,820 | 31,408 | 2,944 | 329 | |||
| Others | 13,563 | (546) | 431 | 9 | |||
| 259,016 | (32,116) | 187 | 135 | ||||
| Current taxes | |||||||
| Actual period | (87,991) | - | - | - | |||
| Correction of previous periods | (249) | - | - | - | |||
| (88,240) | - | - | - | ||||
| 170,776 | (32,116) | 187 | 135 |
The impact of income taxes in Net (loss) / income and in other captions of Group's equity, as at 31 December 2013, is analysed as follows:
| Dec 2013 | ||||
|---|---|---|---|---|
| Net (loss) / income |
Reserves and retained earnings |
Exchange differences |
Discontinued operations |
|
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Deferred taxes | ||||
| Intangible assets | 1 | - | - | (1) |
| Other tangible assets | 1,470 | - | (43) | 6 |
| Impairment losses | 347,932 | - | (1,858) | (27,941) |
| Benefits to employees | 26,568 | 204,552 | (228) | (1,265) |
| Financial assets available for sale | - | (2,666) | 158 | 195 |
| Allocation of profits | 8,303 | - | - | - |
| Derivatives | 1,399 | - | 74 | - |
| Tax losses carried forward | (118,333) | (21,337) | 711 | (53,481) |
| Others | 59,094 | (506) | 600 | (843) |
| 326,434 | 180,043 | (586) | (83,330) | |
| Current taxes | ||||
| Actual period | (78,288) | - | - | - |
| Correction of previous periods | (37,347) | - | - | - |
| (115,635) | - | - | - | |
| 210,799 | 180,043 | (586) | (83,330) |
The reconciliation of the effective tax rate, arising from the permanent effects, is analysed as follows:
| Sep 2014 | Sep 2013 | |||
|---|---|---|---|---|
| % | Euros '000 | % | Euros '000 | |
| Net loss before income taxes | (153,064) 48,215 33,696 (27,795) 51,356 189 110,605 (41,104) (2,295) (2,091) |
(624,838) | ||
| Current tax rate | 31.5% | 29.0% | 181,203 | |
| Foreign tax rate effect and difference in | ||||
| municipal surtax rate | 22.0% | 1.6% | 9,980 | |
| Accruals for the purpose of calculating the taxable income (i) | -18.2% | -10.8% | (67,703) | |
| Deductions for the purpose of calculating the taxable income (ii) | 33.6% | 8.7% | 54,113 | |
| Fiscal incentives not recognised in profit / loss accounts | 0.1% | 0.9% | 5,766 | |
| Effect of tax losses not recognised previously (iii) | 72.3% | -1.0% | (6,455) | |
| Effect of change in rate of deferred tax (iv) | -26.9% | -6.2% | (38,909) | |
| Correction of previous periods | -1.5% | 0.3% | 1,738 | |
| (Autonomous tax) / tax credits | -1.4% | -0.2% | (1,320) | |
| 111.5% | 170,776 | 22.3% | 138,413 |
(i) Refers, essentially, to the tax associated with the additions of impairment losses not deductible for tax purposes, unpaid dividends, annulled for consolidation purposes;
(ii) This is mainly associated with the tax deductions of net income of non-resident companies and net income of associated companies consolidated under the equity method, of capital gains on sale of investments and reduction of taxable impairment;
(iii) Corresponds, essentially, to the recognition of deferred tax assets associated with impairment of investments intended to be settled, net of annulment of deferred tax assets associated with impairment of investments not intended to settlement and to the cancellation or non-recognition of deferred tax assets related to tax losses which are not estimated that will be used within the reporting date;
(iv ) Refers to the effect of increasing the maximum state tax rate net of the effect of reducing the income tax rate in deferred taxes and to the difference of deferred tax rate associated to tax losses.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Debtors | 120,930 | 192,744 | |
| Supplementary capital contributions | 130,310 | 132,348 | |
| Amounts due for collection | 17,464 | 22,284 | |
| Recoverable tax | 19,393 | 20,372 | |
| Recoverable government subsidies on interest | |||
| on mortgage loans | 13,002 | 10,546 | |
| Associated companies | 904 | 1,679 | |
| Interest and other amounts receivable | 46,772 | 38,095 | |
| Prepayments and deferred costs | 38,182 | 22,188 | |
| Amounts receivable on trading activity | 73,425 | 6,486 | |
| Amounts due from customers | 198,617 | 147,524 | |
| Reinsurance technical provision | 3,703 | 2,690 | |
| Sundry assets | 272,569 | 163,072 | |
| 935,271 | 760,028 | ||
| Impairment for other assets | (161,639) | (166,667) | |
| 773,632 | 593,361 |
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Central Banks | 7,136,585 | 11,191,067 |
| Credit institutions in Portugal | 386,513 | 107,098 |
| Credit institutions abroad | 3,115,881 | 2,194,371 |
| 10,638,979 | 13,492,536 |
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Deposits from customers: | ||
| Repayable on demand | 16,129,577 | 15,315,697 |
| Term deposits | 30,729,129 | 31,165,233 |
| Saving accounts | 1,272,537 | 1,462,644 |
| Structured deposits | 1,434,844 | 675,007 |
| Treasury bills and other assets sold | ||
| under repurchase agreement | 66,534 | 16,484 |
| Others | 324,193 | 324,687 |
| 49,956,814 | 48,959,752 |
In the terms of the Law, the Deposit Guarantee Fund was established to guarantee the reimbursement of funds deposited in Credit Institutions. The criteria to calculate the annual contributions to the referred fund are defined in the Regulation no. 11/94 of the Bank of Portugal.
| This balance is analysed as follows: | Sep 2014 | Dec 2013 |
|---|---|---|
| Euros '000 | Euros '000 | |
| Debt securities at amortized cost | ||
| Bonds | 2,231,345 | 2,608,342 |
| Covered bonds | 2,222,184 | 2,184,569 |
| MTNs | 1,988,673 | 3,384,542 |
| Securitizations | 494,698 | 540,442 |
| 6,936,900 | 8,717,895 | |
| Accruals | 138,013 | 97,706 |
| 7,074,913 | 8,815,601 | |
| Debt securities at fair value through profit and loss | ||
| Bonds | 126,748 | 109,414 |
| MTNs | 161,110 | 170,708 |
| 287,858 | 280,122 | |
| Accruals | 1,843 | 3,479 |
| 289,701 | 283,601 | |
| Certificates | 404,618 | 312,025 |
| 7,769,232 | 9,411,227 |
The balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| FRA | - | 68 |
| Swaps | 869,809 | 757,897 |
| Options | 111,606 | 106,181 |
| Embedded derivatives | 68 | 784 |
| Forwards | 5,438 | 4,600 |
| 986,921 | 869,530 |
This balance is analysed as follows:
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Provision for guarantees and other commitments | 246,913 | 211,765 |
| Technical provision for the insurance activity: | ||
| For direct insurance and reinsurance accepted: | ||
| Unearned premium / reserve | 15,076 | 12,037 |
| Life insurance | 54,389 | 50,587 |
| Bonuses and rebates | 3,171 | 1,594 |
| Other technical provisions | 11,991 | 9,960 |
| Other provisions for liabilities and charges | 116,950 | 80,017 |
| 448,490 | 365,960 |
Changes in Provision for guarantees and other commitments are analysed as follows:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 211,765 | 107,470 |
| Transfers resulting from changes in the | ||
| Group's structure | (17) | (7,778) |
| Other transfers | - | 2,348 |
| Charge for the period | 46,808 | 67,613 |
| Write-back for the period | (12,268) | (11,013) |
| Exchange rate differences | 625 | (461) |
| Balance on 30 September | 246,913 | 158,179 |
Changes in Other provisions for liabilities and charges are analysed as follows:
| Sep 2014 Euros '000 |
Sep 2013 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 80,017 | 66,953 |
| Transfers resulting from changes in the | ||
| Group's structure | (931) | (1,030) |
| Other transfers | 7,128 | 1,078 |
| Charge for the period | 34,511 | 105,926 |
| Write-back for the period | (1,200) | (997) |
| Amounts charged-off | (2,801) | (1,545) |
| Exchange rate differences | 226 | (541) |
| Balance on 30 September | 116,950 | 169,844 |
The provisions are accounted in accordance with the probability of occurrence of certain contingencies related with the Group's inherent risks, which are revised in each reporting date in order to reflect the best estimate of the amount and probability of payment.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Bonds | |||
| Non Perpetual Bonds | 1,237,409 | 1,221,541 | |
| Perpetual Bonds | 28,326 | 28,202 | |
| CoCos | 762,002 | 3,024,642 | |
| 2,027,737 | 4,274,385 | ||
| Accruals | 36,396 | 86,953 | |
| 2,064,133 | 4,361,338 |
The caption Subordinated debt - CoCos corresponds to hybrids subordinated debt instruments that qualify as Core Tier I Capital, issued on 29 June 2012, by Banco Comercial Português, S.A. with an initial amount of Euros 3,000,000,000 and fully subscribed by the Portuguese State. These instruments are fully reimbursable by the Bank through a five years period and only in specific circumstances, such as delinquency or lack of payment, are susceptible of being converted in Bank's ordinary shares.
The referred instruments were issued under the scope of the recapitalisation program of the bank, using the Euros 12,000,000,000 line made available by the Portuguese State, under the scope of the IMF intervention program, in accordance with the Law no. 150-A/2012. These instruments are eligible for prudential effects as Core Tier I. However, under the IAS 32 - Financial Instruments: Presentation for accounting purposes, these instruments are classified as liability, according to its characteristics, namely: (i) mandatory obligation to pay capital and interests; and (ii) in case of settlement through the delivery of equity securities, the number of securities to delivery is depending on the market value at the date of conversion, in order to have the value of the bond settled.
Thus, the classification as liability results from the fact that the investor, as holder of the instrument issued, is not exposed to the company equity instruments risk, and will always receive the equivalent amount of the value invested, in cash or in ordinary shares of the Bank.
The operation has an increasing interest rate beginning in 8.5% and ending at the maturity at 10% in 2017.
Banco Comercial Português, S.A. ("BCP") repaid, in August 2014 and as referred in note 47, Euros 1,850,000,000 of common equity tier I capital instruments (CoCos) issued by the Portuguese State, after having received the authorization from the Bank of Portugal, based on the regulator's analysis of the evolution of BCP's capital ratios and as announced during the recent capital increase. Banco Comercial Português, S.A. had already repaid in May 2014, Euros 400,000,000 of core tier I capital instruments (CoCos) issued by the Portuguese State.
As at 30 September 2014, the characteristics of subordinated debt issued are analysed as follows:
| Issue | Issue date |
Maturity date |
Interest rate | Nominal value Euros '000 |
Book value Euros '000 |
|---|---|---|---|---|---|
| Non Perpetual Bonds | |||||
| Banco Comercial Português: | |||||
| Mbcp Ob Cx Sub 1 Serie 2008-2018 | September, 2008 | September, 2018 | See reference (i) | 251,406 | 251,406 |
| Mbcp Ob Cx Sub 2 Serie 2008-2018 | October, 2008 | October, 2018 | See reference (i) | 70,727 | 70,727 |
| Bcp Ob Sub Jun 2020 - Emtn 727 | June, 2010 | June, 2020 | See reference (ii) | 87,178 | 88,465 |
| Bcp Ob Sub Aug 2020 - Emtn 739 | August, 2010 | August, 2020 | See reference (iii) | 53,298 | 54,843 |
| Bcp Ob Sub Mar 2021 - Emtn 804 | March, 2011 | March, 2021 | Euribor 3M + 3.750% | 114,000 | 114,000 |
| Bcp Ob Sub Apr 2021 - Emtn 809 | April, 2011 | April, 2021 | Euribor 3M + 3.750% | 64,100 | 64,100 |
| Bcp Ob Sub 3S Apr 2021 - Emtn 812 | April, 2011 | April, 2021 | Euribor 3M + 3.750% | 35,000 | 35,000 |
| Bcp Sub 11/25.08.2019 - Emtn 823 | August, 2011 | August, 2019 | Fixed rate of 6.383% | 7,500 | 8,213 |
| Bcp Subord Sep 2019 - Emtn 826 | October, 2011 | September, 2019 | Fixed rate of 9.310% | 50,000 | 50,242 |
| Bcp Subord Nov 2019 - Emtn 830 | November, 2011 | November, 2019 | Fixed rate of 8.519% | 40,000 | 38,753 |
| Bcp Subord Dec 2019 - Emtn 833 | December, 2011 | December, 2019 | Fixed rate of 7.150% | 26,600 | 24,550 |
| Mill Bcp Subord Jan 2020 - Emtn 834 | January, 2012 | January, 2020 | Fixed rate of 7.010% | 14,000 | 12,357 |
| Mbcp Subord Feb 2020 - Vm Sr. 173 | April, 2012 | February, 2020 | Fixed rate of 9.000% | 23,000 | 21,411 |
| Bcp Subord Apr 2020 - Vm Sr 187 | April, 2012 | April, 2020 | Fixed rate of 9.150% | 51,000 | 47,775 |
| Bcp Subord 2 Serie Apr 2020 - Vm 194 | April, 2012 | April, 2020 | Fixed rate of 9.000% | 25,000 | 23,279 |
| Bcp Subordinadas Jul 20-Emtn 844 | July, 2012 | July, 2020 | Fixed rate of 9.000% | 26,250 | 23,555 |
| Bank Millennium: | |||||
| MB Finance AB | December, 2007 | December, 2017 | Euribor 6M + 2% | 149,925 | 149,925 |
| Banco de Investimento Imobiliário: | |||||
| BII Ob. Cx. Sub. 2004/2014 | December, 2004 | December, 2014 | See reference (iv) | 15,000 | 14,998 |
| BCP Finance Bank: | |||||
| BCP Fin Bank Ltd EMTN - 295 | December, 2006 | December, 2016 | See reference (v) | 71,209 | 71,196 |
| BCP Fin Bank Ltd EMTN - 828 | October, 2011 | October, 2021 | Fixed rate of 13.000% | 98,850 | 72,570 |
| Magellan No. 3: | |||||
| Magellan No. 3 Series 3 Class F | June, 2005 | May, 2058 | - | 44 | 44 |
| 1,237,409 | |||||
| Perpetual Bonds | |||||
| Obrigações Caixa Perpétuas | |||||
| Subord 2002/19jun2012 | June, 2002 | - | See reference (vi) | 90 | 58 |
| TOPS BPSM 1997 | December, 1997 | - | Euribor 6M + 0.900% | 22,611 | 22,986 |
| BCP Leasing 2001 | December, 2001 | - | Euribor 3M + 1.750% | 5,282 | 5,282 |
| 28,326 | |||||
| CoCos | |||||
| Bcp Coco Bonds 12/29.06.2017 | June, 2012 | June, 2017 | See reference (vii) | 750,000 | 762,002 |
| 762,002 | |||||
| Accruals | 36,396 | ||||
| 2,064,133 |
References :
(i) - 1st year 6.000%; 2nd to 5th year Euribor 6M + 1.000%; 6th year and following Euribor 6M + 1.400%;
(ii) - Until the 5th year fixed rate of 3.250%; 6th year and following years Euribor 6M + 1.000%;
(iii) - 1st year: 3.000%; 2nd year 3.250%; 3rd year 3.500%; 4th year 4.000%; 5th year 5.000%; 6th year and following Euribor 6M + 1.250%;
(iv) - Until 10th coupon Euribor 6M + 0.400%; After 10th coupon Euribor 6M + 0.900%;
(v) - Euribor 3M + 0.300% (0.800% after December 2011);
(vi) - Until 40th coupon 6.131%; After 40th coupon Euribor 3M + 2.400%;
(vii) - 1st year: 8.500%; 2nd year 8.750%; 3rd year 9.000%; 4th year 9.500%; 5th year 10.000%.
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Creditors: | |||
| Suppliers | 33,089 | 38,389 | |
| From factoring operations | 6,620 | 9,052 | |
| Associated companies | 4 | 582 | |
| Other creditors | 262,017 | 371,231 | |
| Public sector | 51,981 | 65,326 | |
| Interests and other amounts payable | 118,020 | 101,244 | |
| Deferred income | 10,157 | 6,506 | |
| Holiday pay and subsidies | 76,196 | 67,800 | |
| Other administrative costs payable | 1,207 | 2,341 | |
| Amounts payable on trading activity | 39,902 | 6,848 | |
| Other liabilities | 468,951 | 327,205 | |
| 1,068,144 | 996,524 |
The Bank's share capital amounts to Euros 3,706,690,253.08 and is represented by 54,194,709,415 ordinary, book-entry and nominate shares, without nominal value, which is fully paid.
On 24 July 2014, the Bank registered a share capital increase from Euros 1,465,000,000 to Euros 3,706,690,253.08 through the issuance of new 34,487,542,355 ordinary, book-entry and nominate shares, without nominal value, which were offered to the Bank's shareholders for subscription through the exercise of their preemptive subscription rights.
In accordance with the Shareholders General Meeting in 30 May of 2014, the bank reduced the share capital from Euros 3,500,000,000 to Euros 1,465,000,000, without changing the number of shares without nominal value at this date, being the reduction of Euros 2,035,000,000 to cover losses on the separate financial statements of the Bank occurred in the year 2013.
The preference shares includes two issues by BCP Finance Company Ltd which considering the rules established in IAS 32 and in accordance with the accounting policy presented in note 1 h), were considered as equity instruments. The issues are analysed as follows:
5,000,000 Perpetual Non-cumulative Guaranteed Non-voting Preference Shares with par value of Euros 100 each, issued on 9 June, 2004, amounting to Euros 500,000,000, issued to redeem the 8,000,000 Non-cumulative Guaranteed Non-voting Preference Shares, with par value of Euros 50 each, issued by BCP Finance Company on 14 June, 1999, amounting to Euros 400,000,000.
10,000 preference shares with par value of Euros 50,000 perpetual each without voting rights issued on 13 October 2005, in the amount of Euros 500,000,000, to redeem the 6,000,000 preference shares, of Euros 100 each, without voting rights, in the amount of Euros 600,000,000, issued by BCP Finance Company on 28 September 2000.
Within the scope of the exchange offer, the majority of the preference shares were exchanged for new debt instruments in October 2011. The amount not exchanged amounts to Euros 171,175,000.
The other capital instruments includes three issues of perpetual subordinated debt securities analysed as follows:
In June 2009, the Bank issued Euros 300,000,000 of perpetual subordinated debt securities with conditional coupons presenting a nominal value of Euros 1,000, which were considered as capital instruments.
In August 2009, the Bank issued Euros 600,000,000 of perpetual subordinated debt securities with conditional coupons presenting a nominal value of Euros 1,000, which were considered as capital instruments.
In December 2009, the Bank issued Euros 100,000,000 of perpetual subordinated debt securities with conditional coupons presenting a nominal value of Euros 1,000, which were considered as capital instruments.
These issues were exchanged within the scope of the public change offering of perpetual subordinated securities for ordinary shares, performed in 2011. The amount not exchanged amounted to Euros 9,853,000.
Under Portuguese legislation, the Bank is required to set-up annually a legal reserve equal to a minimum of 10 percent of annual profits until the reserve equals the share capital. Such reserve is not normally distributable. In accordance with the proposal approved in the General Shareholders Meeting held on 30 May 2014, the Bank maintained its legal reserve in the amount of Euros 193,270,000.
In accordance with current legislation, the Group companies must set-up annually a reserve with a minimum percentage between 5 and 20 percent of their net annual profits depending on the nature of their economic activity.
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Actuarial losses (net of taxes) | (1,889,009) | (1,877,291) |
| Exchange differences arising on consolidation | (96,213) | (120,132) |
| Fair value reserves | ||
| Financial assets available for sale | ||
| Potential gains and losses recognised | ||
| in fair value reserves | 233,323 | 113,461 |
| Loans represented by securities (*) | (22) | (25) |
| Financial assets held to maturity (*) | 5,233 | 5,503 |
| Of associated companies and others | 7,167 | (39,340) |
| Cash-flow hedge | (22,392) | (25,141) |
| 223,309 | 54,458 | |
| Tax | ||
| Financial assets available for sale | ||
| Potential gains and losses recognised | ||
| in fair value reserves | (66,667) | (35,186) |
| Loans represented by securities | 7 | 8 |
| Financial assets held to maturity | (1,648) | (1,733) |
| Cash-flow hedge | 4,254 | 4,764 |
| (64,054) | (32,147) | |
| Fair value reserve net of taxes | 159,255 | 22,311 |
| (1,825,967) | (1,975,112) | |
| Other reserves and retained earnings: | ||
| Legal reserve | 193,270 | 193,270 |
| Statutory reserve | 30,000 | 30,000 |
| Other reserves and retained earnings | 2,836,364 | 1,585,859 |
| Other reserves arising on consolidation | (169,874) | (168,643) |
| 2,889,760 | 1,640,486 |
(*) Refers to the amount not accrued the fair value reserve at the date of reclassification for securities subject to reclassification.
The changes occurred in legal reserve are analysed in note 42. The Fair value reserves correspond to the accumulated fair value changes of the financial assets available for sale and Cash flow hedge, in accordance with the accounting policy presented in note 1 d).
The balance Statutory reserves corresponds to a reserve to steady dividends that, according to the bank's by-laws can be distributed.
This balance is analysed as follows:
| Banco Comercial | Other | |||
|---|---|---|---|---|
| Português, S.A. | treasury | |||
| shares | stock | Total | ||
| Sep 2014 | ||||
| Net book value (Euros '000) | 20,894 | 12,431 | 33,325 | |
| Number of securities | 201,682,429 | (*) | ||
| Average book value (Euros) | 0.10 | |||
| Dec 2013 | ||||
| Net book value (Euros '000) | 12,757 | 9,988 | 22,745 | |
| Number of securities | 76,664,387 | (*) | ||
| Average book value (Euros) | 0.17 |
Treasury stock refers to own securities held by the companies included in the consolidation perimeter. These securities are held within the limits established by the bank's by-laws and by "Código das Sociedades Comerciais".
(*) As at 30 September 2014, this balance includes 201,682,429 shares (31 December 2013: 76,664,387 shares) owned by clients which were financed by the Bank. Considering the fact that for these clients there is evidence of impairment, under the IAS 39 the shares of the Bank owned by these clients were, only for accounting purposes and in accordance with this standard, considered as treasury stock.
The balance Non-controlling interests is analysed as follows:
| Balance Sheet | Income Statement | |||
|---|---|---|---|---|
| Sep 2014 | Dec 2013 | Sep 2014 | Sep 2013 | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Bank Millennium, S.A. | 466,913 | 445,219 | 40,717 | 32,181 |
| BIM - Banco Internacional de Moçambique, SA | 148,628 | 128,099 | 22,264 | 21,307 |
| Banco Millennium Angola, S.A. | 153,049 | 123,528 | 18,589 | 13,744 |
| Other subsidiaries | (3,917) | (4,245) | 329 | 108 |
| 764,673 | 692,601 | 81,899 | 67,340 | |
This balance is analysed as follows:
| Sep 2014 Euros '000 |
Dec 2013 Euros '000 |
|
|---|---|---|
| Exchange differences arising on consolidation | (2,214) | (18,577) |
| Fair value reserves | (2,516) | (7,927) |
| Deferred taxes | 46 | 648 |
| (4,684) | (25,856) | |
| Other reserves and retained earnings | 769,357 | 718,457 |
| 764,673 | 692,601 |
This balance is analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Guarantees granted | 5,403,993 | 5,528,090 |
| Guarantees received | 30,994,199 | 29,292,448 |
| Commitments to third parties | 8,588,513 | 8,003,594 |
| Commitments from third parties | 10,767,984 | 14,043,416 |
| Securities and other items held for safekeeping | ||
| on behalf of customers | 124,480,783 | 109,426,379 |
| Securities and other items held under custody | ||
| by the Securities Depository Authority | 131,606,539 | 129,517,608 |
| Other off balance sheet accounts | 134,290,916 | 148,832,584 |
The amounts of Guarantees granted and Commitments to third parties are analysed as follows:
| Sep 2014 | Dec 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Guarantees granted: | ||
| Guarantees | 4,174,170 | 4,309,714 |
| Stand-by letter of credit | 79,907 | 81,876 |
| Open documentary credits | 357,494 | 291,701 |
| Bails and indemnities | 792,422 | 844,799 |
| 5,403,993 | 5,528,090 | |
| Commitments to third parties | ||
| Irrevocable commitments | ||
| Term deposits contracts | 884,115 | 50,111 |
| Irrevocable credit lines | 2,260,320 | 2,296,632 |
| Other irrevocable commitments | 329,222 | 308,622 |
| Revocable commitments | ||
| Revocable credit lines | 3,760,322 | 3,996,579 |
| Bank overdraft facilities | 1,124,252 | 1,184,706 |
| Other revocable commitments | 230,282 | 166,944 |
| 8,588,513 | 8,003,594 |
The guarantees granted by the Group may be related with loan transactions, where the Group grants a guarantee in connection with a loan granted to a client by a third entity. According to its specific characteristics it is expected that some of these guarantees expire without being executed and therefore these transactions do not necessarily represent a cash-outflow.
Stand-by letters and open documentary credits aim to ensure the payment to third parties from commercial deals with foreign entities and therefore financing the shipment of the goods. Therefore the credit risk of these transactions is limited since they are collateralised by the shipped goods and are generally short term operations.
Irrevocable commitments are non-used parts of credit facilities granted to corporate or retail customers. Many of these transactions have a fixed term and a variable interest rate and therefore the credit and interest rate risk is limited.
The financial instruments accounted as Guarantees and other commitments are subject to the same approval and control procedures applied to the credit portfolio, namely regarding the analysis of objective evidence of impairment, as described in note 1 c). The maximum credit exposure is represented by the nominal value that could be lost related to guarantees and commitments undertaken by the Group in the event of default by the respective counterparties, without considering potential recoveries or collaterals. Considering their nature, as described above, no material losses are anticipated as a result of these transactions.
On 24 July 2014, the Bank registered a share capital increase from Euros 1,465,000,000 to Euros 3,706,690,253.08 through the issuance of new 34,487,542,355 ordinary, book-entry and nominate shares, without nominal value, which were offered to the Bank's shareholders for subscription through the exercise of their preemptive subscription rights.
As such, the current Bank's share capital is Euros 3,706,690,253.08 represented by 54,194,709,415 ordinary, book-entry and nominate shares, without nominal value.
Banco Comercial Português, S.A. ("BCP") signed on 30 July 2014 an agreement with OTP Bank regarding the sale of the entire share capital of Banca Millennium (Romania) ("BMR"). The transaction is subjected to customary condition, in particular to obtaining regulatory approvals. The aggregate consideration for the sale of the share capital of BMR was agreed at Euros 39,000,000. On the date of closing of the sale transaction, OTP Bank will ensure full reimbursement to BCP of the intragroup funding currency provided by BCP to BMR, amounting to approximately Euros 150,000,000.
Banco Comercial Português, S.A. ("BCP") repaid Euros 1,850,000,000 of common equity tier I capital instruments (CoCos) issued by the Portuguese State, after having received the authorization from the Bank of Portugal, based on the regulator's analysis of the evolution of BCP's capital ratios and as announced during the recent capital increase.
On 3 August 2014, the Bank of Portugal has adopted a set of measures in the resolution process of Banco Espírito Santo, SA, which included the capitalization of Euro 4.9 billion of a new entity called Novo Banco using the Resolution Fund (FR). Depending on the selling price of the Novo Banco, which must occur within a period of two years, the FR may suffer losses or gains over the amount placed in this entity. As a participant in the Resolution Fund, together with other banks domiciled in Portugal, if the FR suffers losses, the Bank may be asked to perform extraordinary contributions to the future FR, which will be reflected as a charge in the income statement.
On 30 May, 2014, the Annual General Meeting of the Bank was held with 45.48% of the share capital represented. In this meeting the following resolutions were taken: (i) Approval of the separate and consolidated annual report, balance sheet and financial statements of 2013; (ii) Approval of the proposal to transfer the losses recorded in the 2013 separate balance sheet to Retained Earnings; (iii) Approval of a vote of support and praise addressed to the Board of Directors, including its Executive Committee and Audit Committee and to each one of their members, as well to the Statutory Auditor; (iv) Approval of the proposal for reducing the number of members of the Remuneration and Welfare Board in the 2014/2016 term-of-office to 4; (v) Approval of the proposal for reducing the number of members of the Board of Directors from 22 to 20; (vi) Approval of the current members of the Board of the General Meeting of Shareholders for the exercise of functions during the term of office 2014/2016; (vii) Approval of the election as Effective and Alternate Statutory Auditor of the Bank to exercise functions during the term of the office 2014/2016; (viii) Approval of the election as External Auditor of the Bank to exercise functions during term of the office 2014/2016; (ix) Approval of the remuneration policy for the members of the Board of Directors, including the Executive Committee; (x) Approval of the reformulation the items of own capital by reducing the share capital; (xi) Approval of the acquisition and sale of own shares and bonds.
Pursuant to the resolutions adopted at the Annual General Meeting of the Bank held on 30 May, 2014, the Bank registered the new share capital of Euros 1,465,000,000, represented by 19,707,167,060 nominative, book-entry shares without nominal value.
Reimbursement to the Portuguese State of Euros 400,000,000 of CoCos
On May 2014, Banco Comercial Português, S.A. repaid Euros 400,000,000 of core tier I capital instruments (CoCos) issued by the Portuguese State, after having received the authorization from the Bank of Portugal, based on the regulator's analysis of the evolution of BCP's capital ratios
As part of a process aiming to refocus on core activities, defined as a priority in its Strategic Plan, BCP announces that it has agreed with the international insurance group Ageas a partial recast of the strategic partnership agreements entered into in 2004, which included the sale of its 49% interest in the (currently jointly owned) insurance companies that operate exclusively in the non-life insurance business, i.e., "Ocidental – Companhia Portuguesa de Seguros, S.A." and "Médis – Companhia Portuguesa de Seguros de Saúde, S.A.", for a base price of Euros 122,500,000, subject to a medium term performance adjustment. In 2013, the Non-Life activity posted gross inflows of Euros 251,000,000 and a net profit of Euros 12,000,000.
The partners (Ageas and BCP) have also agreed that the joint venture will upstream excess capital totalling Euros 290,000,000 in 2014 to its shareholders.
As referred in note 17, this sale generated a gain in the amount of Euros 69,396,000, on a consolidated basis.
Banco Comercial Português informs on a new synthetic securitization transaction
Banco Comercial Português, S.A. ("BCP") completed in June 2014, the execution of a new securitisation transaction ("Caravela SME No. 4") concerning a pool of leasing contracts to companies and sole-partnerships, amounting to Euros 1,000,000,000.
In February 2014, Banco Comercial Português, S.A. placed a senior unsecured debt issue under its Euro Medium Term Note Program. The issue, in the amount of Euros 500,000,000, has a term of 3 years and a coupon of 3.375% per annum.
The segments presented are in accordance with IFRS 8. In accordance with the Group's management model, the segments presented correspond to the segments used for Executive Committee's management purposes. The Group offers a wide range of banking activities and financial services in Portugal and abroad, with a special focus on Commercial Banking, Corporate and Investment Banking and Asset Management and Private Banking.
Following the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp), an additional segment, was considered, non-Core Business Portfolio, respecting the criteria agreed.
The Retail Banking activity includes the Retail activity of Banco Comercial Português in Portugal, operating as a distribution channel for products and services from other companies of the Group, and the Foreign business segment, operating through several banking operations in markets with affinity to Portugal and in countries with higher growth potential.
The Retail segment in Portugal includes: (i) the Retail network in Portugal, where the strategic approach is to target "Mass Market" customers, who appreciate a value proposition based on innovation and speed, as well as Prestige and Small Business customers, whose specific characteristics, financial assets or income imply a value proposition based on innovation and personalisation, requiring a dedicated Account Manager; and (ii) ActivoBank, a bank focused on clients who are young, intensive users of new communication technologies and who prefer a banking relationship based on simplicity, offering modern products and services.
The Foreign Business segment, for the purpose of business segments, comprises the operations outside Portugal, in particular Bank Millennium in Poland, Millennium bim in Mozambique and Banco Millennium Angola. The Foreign Business segment, in terms of geographical segments, comprises the Group operations outside Portugal referred to above, and also Banque Privée BCP in Switzerland and Millennium bcp Bank & Trust in the Cayman Islands.
In Poland, the Group is represented by a universal bank offering a wide range of financial products and services to individuals and companies nationwide; in Mozambique by a universal bank targeting companies and individual customers, in Angola by a bank focused on private customers and companies as well as public and private institutions and in the Cayman Islands by Millennium bcp Bank & Trust, a bank designed for international services in the area of Private Banking to customers with high net worth ("Affluent" segment). In Switzerland the Group is represented by Banque Privée BCP, a Private Banking platform under Swiss law.
The Companies Banking business includes the Companies segment in Portugal, which operates as a distribution channel of products and services from other companies of the Group, and the Corporate & Investment Banking segment.
The Companies in Portugal segment includes: (i) the Companies network that covers the financial needs of companies with an annual turnover between Euros 2.5 million and Euros 50 million, and focuses on innovation, offering a wide range of traditional banking products complemented by specialised financing, (ii) Specialised Recovery Division, (iii) the activity of the Real Estate Business Division and (iv) Interfundos.
The Corporate & Investment Banking segment includes: (i) the Corporate network in Portugal, targeting corporate and institutional customers with an annual turnover in excess of Euros 50 million, providing a complete range of value-added products and services; (ii) Specialised Monitoring Division, (iii) the Investment Banking unit, and (iv) the activity of the Bank's International Division.
The Asset Management and Private Banking segment, for purposes of the business segments, comprises (i) the Private Banking network in Portugal, (ii) Asset Management, (iii) BII Investimentos Internacional and also includes the activities of (iv) Banque Privée BCP and (v) Millennium bcp Bank & Trust. For purposes of the geographical segments excludes Banque Privée BCP and Millennium bcp Bank & Trust that are considered Foreign Business.
Following the process for obtaining authorisation from the European Commission (EC) to the State aid, business portfolios were identified that the Bank should gradually disinvest/demobilise, ceasing grant new credit. This demobilisation is subject to a framework which dominant criteria is the capital impact optimisation, in particular through the minimisation of expected loss.
In this context, the Bank proceeded with the segregation of these portfolios, highlighting them in a separate segment defined as Non Core Business Portfolio (PNNC).
PNNC includes the business with clients for which credit has been granted for securities-backed lending, loans collateralised with other assets (for those which the debt ratio over asset value is not less than 90%), subsidised mortgage loans, construction subcontractors focused almost exclusively on the Portuguese market, football clubs and Real Estate development.
The separate disclosure for those types of loans resulted, exclusively, from the need to identify and monitoring the segments described in the previous paragraph, in the scope of the authorisation process abovementioned. Thus, the PNNC portfolio has not been aggregated based on risk classes or any other performance criteria.
It should be noted that, in 30 September 2014, 73% of this portfolio benefited from asset backed loans, including 67% with real estate collateral and 6% with other assets guarantee.
All other businesses are allocated to the segment Others and include the centralized management of financial investments, corporate activities and operations not integrated in the remaining business segments and other values not allocated to segments.
The figures reported for each business segment result from aggregating the subsidiaries and business units integrated in each segment, including the impact from capital allocation and the balancing process of each entity, both at the balance sheet and income statement levels, based on average figures. Balance sheet headings for each subsidiary and business unit are re-calculated, given the replacement of their original own funds by the outcome of the capital allocation process, according to regulatory solvency criteria.
Considering that the capital allocation process complies with regulatory solvency criteria currently in place, the weighted risk, as well as the capital allocated to segments, are based on Basel III methodology, in accordance with the CRD IV/CRR, with reference to September 2014. The capital allocation for each segment in September 2013 and September 2014, resulted from the application of 10% to the risks managed by each segment on those dates, reflecting the application of methodologies of Basel III in September 2014 and Basel II in September 2013. Each operation is balanced through internal transfers of funds, with no impact on consolidated accounts.
Operating costs determined for each business area rely on one hand on the amounts accounted directly in the respective cost centres, and on the other hand, on the amounts resulting from internal cost allocation processes. As an example, in the first set of costs are included costs related to phone communication, travelling accommodation and representation expenses and to advisory services and in the second set are included costs related to correspondence, water and electricity and to rents related to spaces occupied by organic units, among others. The allocation of this last set of costs is based on the application of previously defined criteria, related to the level of activity of each business area, like the number of current accounts, the number of customers or employees, the business volume and the space occupied.
The following information is based on financial statements prepared according to IFRS and on the organisational model in place for the Group, as at 30 September 2014.
The Group operates with special emphasis in the Portuguese market, and also in a few affinity markets and in markets of recognised growth potential. Considering this, the geographical segments include Portugal, Poland, Mozambique, Angola and Other. The segment Portugal reflects, essentially, the activities carried out by Banco Comercial Português in Portugal, ActivoBank and Banco de Investimento Imobiliário. The segment Poland includes the business carried out by Bank Millennium (Poland); while the segment Mozambique contains the activity of BIM - Banco Internacional de Moçambique and the segment Angola contains the activity of Banco Millennium Angola. The segment Other, indicated within the geographical segment reporting, comprises the Group's operations not included in the remaining segments, namely the activities developed in other countries, such as Banque Privée BCP in Switzerland and Millennium bcp Bank & Trust in the Cayman Islands.
Regarding the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp) on the Bank's Restructuring Plan, in particular the sale of Millennium bcp's operation in Romania in the mid-term and the implementation of a new approach to the assets management business, the activities of Millennium bank in Romania and of Millennium bcp Gestão de Activos were presented on the line item of "income arising from discontinued operations" at 30 September 2013 and at 30 September 2014. At the consolidated balance sheet level, the presentation of assets and liabilities of Millennium bank in Romania and of Millennium bcp Gestão de Activos remained considered as at 30 September 2014 and at 30 September 2013.
Additionally, following the sale of the entire share capital of Millennium bank in Greece, concluded on 19 June 2013, Millennium bank in Greece was classified as a discontinued operation, during 2013, and the results obtained till that date presented on a separate line item in the profit and loss account, defined as "income arising from discontinued operations".
As at 30 September, 2014, the net contribution of the major business segments is analysed as follows:
| Commercial Banking | Companies Banking | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Corporate and | Asset | |||||||||
| Retail | Foreign | Companies | Investment Banking |
Management and Private |
Portfolio non core |
|||||
| in Portugal | Business | Total | in Portugal | in Portugal | Total | Banking | business | Other | Consolidated | |
| Income statement | ||||||||||
| Interest income Interest expense |
460,269 (287,542) |
707,562 (296,854) |
1,167,831 (584,396) |
153,090 (65,248) |
278,896 (109,686) |
431,986 (174,934) |
51,755 (43,527) |
223,998 (204,998) |
137,804 (214,565) |
2,013,374 (1,222,420) |
| Net interest income | 172,727 | 410,708 | 583,435 | 87,842 | 169,210 | 257,052 | 8,228 | 19,000 | (76,761) | 790,954 |
| Commissions and other income Commissions and other costs |
248,569 (10,904) |
221,172 (56,154) |
469,741 (67,058) |
49,278 (2,668) |
83,683 (1,678) |
132,961 (4,346) |
42,173 (4,276) |
16,386 (961) |
22,190 (123,572) |
683,451 (200,213) |
| Net commissions and other income |
237,665 | 165,018 | 402,683 | 46,610 | 82,005 | 128,615 | 37,897 | 15,425 | (101,382) | 483,238 |
| Net gains arising from trading activity |
51 | 67,167 | 67,218 | - | - | - | 1,730 | - | 288,209 | 357,157 |
| Staff costs and administrative costs Depreciations |
409,706 1,404 |
300,580 23,538 |
710,286 24,942 |
47,513 221 |
27,101 69 |
74,614 290 |
28,226 189 |
18,994 22 |
(22,884) 22,884 |
809,236 48,327 |
| Operating costs | 411,110 | 324,118 | 735,228 | 47,734 | 27,170 | 74,904 | 28,415 | 19,016 | - | 857,563 |
| Impairment and provisions | (151,611) | (62,812) | (214,423) | (154,954) | (145,962) | (300,916) | 1,051 | (333,938) | (169,271) | (1,017,497) |
| Share of profit of associates under the equity method |
- | - | - | - | - | - | - | - | 28,221 | 28,221 |
| Net gain from the sale of other assets |
- | 3,171 | 3,171 | - | - | - | - | - | 59,255 | 62,426 |
| Net (loss) / income before income tax |
(152,278) | 259,134 | 106,856 | (68,236) | 78,083 | 9,847 | 20,491 | (318,529) | 28,271 | (153,064) |
| Income tax | 47,764 | (53,572) | (5,808) | 21,672 | (24,596) | (2,924) | (4,514) | 100,337 | 83,685 | 170,776 |
| (Loss) / income after income tax from continuing operations |
(104,514) | 205,562 | 101,048 | (46,564) | 53,487 | 6,923 | 15,977 | (218,192) | 111,956 | 17,712 |
| (Loss) / income arising from discontinued operations |
- | (36,054) | (36,054) | - | - | - | - | - | 1,984 | (34,070) |
| Net (loss) / income after income tax | (104,514) | 169,508 | 64,994 | (46,564) | 53,487 | 6,923 | 15,977 | (218,192) | 113,940 | (16,358) |
| Non-controlling interests | - | (74,692) | (74,692) | - | - | - | - | - | (7,207) | (81,899) |
| Net (loss) / income after income tax | (104,514) | 94,816 | (9,698) | (46,564) | 53,487 | 6,923 | 15,977 | (218,192) | 106,733 | (98,257) |
| Balance sheet | ||||||||||
| Cash and Loans and advances | ||||||||||
| to credit institutions | 6,393,536 | 1,606,192 | 7,999,728 | 39,100 | 2,361,008 | 2,400,108 | 2,635,763 | 3,977 | (9,647,614) | 3,391,962 |
| Loans and advances to customers | 17,680,140 | 13,036,730 | 30,716,870 | 4,675,029 | 7,169,667 | 11,844,696 | 493,350 | 11,266,323 | 487,157 | 54,808,396 |
| Financial assets (*) | 482,321 | 3,877,959 | 4,360,280 | - | - | - | 16,432 | - | 9,656,688 | 14,033,400 |
| Other assets | 147,515 | 730,198 | 877,713 | 13,159 | 42,386 | 55,545 | 18,722 | 1,406 | 5,610,600 | 6,563,986 |
| Total Assets | 24,703,512 | 19,251,079 | 43,954,591 | 4,727,288 | 9,573,061 | 14,300,349 | 3,164,267 | 11,271,706 | 6,106,831 | 78,797,744 |
| Deposits from other credit institutions |
15,672 | 2,038,557 | 2,054,229 | 2,176,309 | 1,326,190 | 3,502,499 | 288,395 | 10,534,342 | (5,740,486) | 10,638,979 |
| Deposits from customers | 22,479,956 | 14,855,089 | 37,335,045 | 2,023,622 | 7,341,696 | 9,365,318 | 2,506,620 | 243,600 | 506,231 | 49,956,814 |
| Debt securities issued | 1,642,181 | 444,798 | 2,086,979 | 4,940 | 39 | 4,979 | 154,503 | 4,101 | 5,518,670 | 7,769,232 |
| Other financial liabilities | - | 409,380 | 409,380 | - | - | - | 14,012 | - | 2,891,270 | 3,314,662 |
| Other liabilities | 19,475 | 451,259 | 470,734 | 12,754 | 29,183 | 41,937 | 8,991 | 4,743 | 1,007,050 | 1,533,455 |
| Total Liabilities | 24,157,284 | 18,199,083 | 42,356,367 | 4,217,625 | 8,697,108 | 12,914,733 | 2,972,521 | 10,786,786 | 4,182,735 | 73,213,142 |
| Equity and non-controlling interests |
546,228 | 1,051,996 | 1,598,224 | 509,663 | 875,953 | 1,385,616 | 191,746 | 484,920 | 1,924,096 | 5,584,602 |
| Total Liabilities, Equity and non-controlling interests |
24,703,512 | 19,251,079 | 43,954,591 | 4,727,288 | 9,573,061 | 14,300,349 | 3,164,267 | 11,271,706 | 6,106,831 | 78,797,744 |
Notes to the Interim Consolidated Financial Statements
30 September, 2014
As at 30 September, 2013, the net contribution of the major business segments is analysed as follows:
| Commercial Banking | Companies Banking | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Retail in Portugal |
Foreign Business |
Total | Companies in Portugal |
Corporate and Investment Banking in Portugal |
Total | Asset Management and Private Banking |
Portfolio non core business |
Other | Consolidated | |
| Income statement | ||||||||||
| Interest income Interest expense |
452,004 (375,069) |
682,364 (345,985) |
1,134,368 (721,054) |
176,508 (83,068) |
311,349 (157,890) |
487,857 (240,958) |
69,516 (65,515) |
288,481 (243,439) |
165,851 (261,350) |
2,146,073 (1,532,316) |
| Net interest income | 76,935 | 336,379 | 413,314 | 93,440 | 153,459 | 246,899 | 4,001 | 45,042 | (95,499) | 613,757 |
| Commissions and other income Commissions and other costs |
256,557 (11,044) |
215,878 (52,398) |
472,435 (63,442) |
50,770 (3,642) |
88,939 (6,842) |
139,709 (10,484) |
35,624 (5,450) |
19,969 (55) |
41,348 (160,405) |
709,085 (239,836) |
| Net commissions and other | ||||||||||
| income | 245,513 | 163,480 | 408,993 | 47,128 | 82,097 | 129,225 | 30,174 | 19,914 | (119,057) | 469,249 |
| Net gains arising from trading activity |
(19) | 80,744 | 80,725 | - | - | - | 1,153 | - | 67,495 | 149,373 |
| Staff costs and administrative costs Depreciations |
440,536 1,495 |
293,409 22,405 |
733,945 23,900 |
49,993 186 |
29,184 74 |
79,177 260 |
26,706 215 |
20,045 31 |
(20,558) 24,314 |
839,315 48,720 |
| Operating costs | 442,031 | 315,814 | 757,845 | 50,179 | 29,258 | 79,437 | 26,921 | 20,076 | 3,756 | 888,035 |
| Impairment and provisions | (66,251) | (56,753) | (123,004) | (185,598) | (149,949) | (335,547) | 245 | (277,235) | (258,526) | (994,067) |
| Share of profit of associates under the equity method |
- | 312 | 312 | - | - | - | - | - | 46,128 | 46,440 |
| Net gain from the sale of other assets |
- | 7,569 | 7,569 | - | - | - | 3 | - | (29,127) | (21,555) |
| Net (loss) / income before income tax |
(185,853) | 215,917 | 30,064 | (95,209) | 56,349 | (38,860) | 8,655 | (232,355) | (392,342) | (624,838) |
| Income tax | 58,265 | (43,187) | 15,078 | 30,066 | (17,750) | 12,316 | 176 | 73,191 | 37,652 | 138,413 |
| (Loss) / income after income tax from continuing operations |
(127,588) | 172,730 | 45,142 | (65,143) | 38,599 | (26,544) | 8,831 | (159,164) | (354,690) | (486,425) |
| (Loss) / income arising from | ||||||||||
| discontinued operations | - | (44,838) | (44,838) | - | - | - | - | - | 1,277 | (43,561) |
| Net (loss) / income after income tax Non-controlling interests |
(127,588) - |
127,892 (62,227) |
304 (62,227) |
(65,143) - |
38,599 - |
(26,544) - |
8,831 - |
(159,164) - |
(353,413) (5,113) |
(529,986) (67,340) |
| Net (loss) / income after income tax | (127,588) | 65,665 | (61,923) | (65,143) | 38,599 | (26,544) | 8,831 | (159,164) | (358,526) | (597,326) |
| Balance sheet | ||||||||||
| Cash and Loans and advances | ||||||||||
| to credit institutions | 4,572,759 | 2,204,438 | 6,777,197 | 32,347 | 1,828,889 | 1,861,236 | 3,121,357 | 5,349 | (7,161,214) | 4,603,925 |
| Loans and advances to customers | 18,301,450 | 11,982,487 | 30,283,937 | 4,930,357 | 8,197,340 | 13,127,697 | 550,393 | 13,040,548 | 104,144 | 57,106,719 |
| Financial assets (*) | 178,135 | 2,896,046 | 3,074,181 | - | - | - | 23,214 | - | 12,218,132 | 15,315,527 |
| Other assets | 86,391 | 681,352 | 767,743 | 5,801 | 21,390 | 27,191 | 16,840 | 905 | 5,282,555 | 6,095,234 |
| Total Assets | 23,138,735 | 17,764,323 | 40,903,058 | 4,968,505 | 10,047,619 | 15,016,124 | 3,711,804 | 13,046,802 | 10,443,617 | 83,121,405 |
| Deposits from other credit | ||||||||||
| institutions | - | 2,062,858 | 2,062,858 | 2,963,847 | 1,547,348 | 4,511,195 | 755,881 | 12,047,818 | (3,994,191) | 15,383,561 |
| Deposits from customers | 20,582,714 | 13,626,157 | 34,208,871 | 1,588,443 | 7,448,280 | 9,036,723 | 2,591,763 | 315,042 | 1,272,159 | 47,424,558 |
| Debt securities issued | 2,010,614 | 204,697 | 2,215,311 | 4,909 | 1,512 | 6,421 | 211,993 | 6,008 | 7,472,806 | 9,912,539 |
| Other financial liabilities Other liabilities |
- 16,797 |
476,087 360,216 |
476,087 377,013 |
- 17,955 |
- 34,442 |
- 52,397 |
21,503 4,485 |
- - |
5,219,263 873,796 |
5,716,853 1,307,691 |
| Total Liabilities | 22,610,125 | 16,730,015 | 39,340,140 | 4,575,154 | 9,031,582 | 13,606,736 | 3,585,625 | 12,368,868 | 10,843,833 | 79,745,202 |
| Equity and non-controlling interests |
528,610 | 1,034,308 | 1,562,918 | 393,351 | 1,016,037 | 1,409,388 | 126,179 | 677,934 | (400,216) | 3,376,203 |
| Total Liabilities, Equity and non-controlling interests |
23,138,735 | 17,764,323 | 40,903,058 | 4,968,505 | 10,047,619 | 15,016,124 | 3,711,804 | 13,046,802 | 10,443,617 | 83,121,405 |
As at 30 September, 2014, the net contribution of the major geographic segments is analysed as follows:
| Portugal | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retail Banking |
Companies | Corporate and Banking |
Asset Ma nagement Investment and Private Banking |
Portfolio non core business |
Other | Total | Poland | Angola | Mozam- bique |
Other | Consoli dated |
|
| Income statement | ||||||||||||
| Interest income Interest expense |
460,269 (287,542) |
153,090 (65,248) |
278,896 (109,686) |
32,146 (30,255) |
223,998 | 137,804 | 1,286,203 (204,998) (214,565) (912,294) (216,760) (29,366) (50,728) (13,272) (1,222,420) |
468,731 | 89,282 | 149,549 | 19,609 | 2,013,374 |
| Net interest income | 172,727 | 87,842 | 169,210 | 1,891 | 19,000 | (76,761) | 373,909 | 251,971 | 59,916 | 98,821 | 6,337 | 790,954 |
| Commissions and other income |
248,569 | 49,278 | 83,683 | 19,985 | 16,386 | 22,190 | 440,091 | 130,821 | 31,181 | 59,170 | 22,188 | 683,451 |
| Commissions and other costs |
(10,904) | (2,668) | (1,678) | (144) | (961) (123,572) (139,927) | (32,928) | (5,710) (17,516) | (4,132) | (200,213) | |||
| Net commissions | ||||||||||||
| and other income Net gains arising from |
237,665 | 46,610 | 82,005 | 19,841 | 15,425 | (101,382) | 300,164 | 97,893 | 25,471 | 41,654 | 18,056 | 483,238 |
| trading activity Staff costs and |
51 | - | - | - | - | 288,209 | 288,260 | 34,504 | 19,199 | 13,464 | 1,730 | 357,157 |
| administrative costs Depreciations |
409,706 1,404 |
47,513 221 |
27,101 69 |
11,990 4 |
18,994 22 |
(22,884) 22,884 |
492,420 24,604 |
188,015 9,510 |
48,950 6,228 |
63,615 7,800 |
16,236 185 |
809,236 48,327 |
| Operating costs | 411,110 | 47,734 | 27,170 | 11,994 | 19,016 | - | 517,024 | 197,525 | 55,178 | 71,415 | 16,421 | 857,563 |
| Impairment and provisions |
(151,611) (154,954) | (145,962) | 142 | (333,938) (169,271) (955,594) | (48,116) | (7,299) | (7,397) | 909 | (1,017,497) | |||
| Share of profit of associates under the equity method Net gain from the sale |
- | - | - | - | - | 28,221 | 28,221 | - | - | - | - | 28,221 |
| of other assets | - | - | - | - | - | 59,255 | 59,255 | 2,325 | 209 | 637 | - | 62,426 |
| Net (loss) / income before income tax |
(152,278) | (68,236) | 78,083 | 9,880 | (318,529) | 28,271 | (422,809) | 141,052 | 42,318 | 75,764 | 10,611 | (153,064) |
| Income tax | 47,764 | 21,672 | (24,596) | (3,110) | 100,337 | 83,685 | 225,752 | (32,996) | (6,847) (13,729) | (1,404) | 170,776 | |
| (Loss) / income after income tax from continuing operations |
(104,514) | (46,564) | 53,487 | 6,770 | (218,192) | 111,956 | (197,057) | 108,056 | 35,471 | 62,035 | 9,207 | 17,712 |
| (Loss) / income arising from discontinued operations |
- | - | - | - | - | 1,984 | 1,984 | - | - | - | (36,054) | (34,070) |
| Net (loss) / income after income tax |
(104,514) | (46,564) | 53,487 | 6,770 | (218,192) | 113,940 | (195,073) | 108,056 | 35,471 | 62,035 | (26,847) | (16,358) |
| Non-controlling interests | - | - | - | - | - | (7,207) | (7,207) | (37,269) (16,765) (20,658) | - | (81,899) | ||
| Net (loss) / income after income tax |
(104,514) | (46,564) | 53,487 | 6,770 | (218,192) | 106,733 | (202,280) | 70,787 | 18,706 | 41,377 | (26,847) | (98,257) |
| Balance sheet | ||||||||||||
| Cash and Loans and | ||||||||||||
| advances to credit institutions Loans and advances to |
6,393,536 | 39,100 | 2,361,008 | 1,566,977 | 3,977 | (9,647,614) | 716,984 | 838,534 | 363,185 | 332,867 | 1,140,392 | 3,391,962 |
| customers | 17,680,140 | 4,675,029 | 7,169,667 | 244,975 | 11,266,323 | 487,157 | 41,523,291 | 10,474,908 | 878,206 | 1,322,589 | 609,402 | 54,808,396 |
| Financial assets (*) | 482,321 | - | - | 50 | - | 9,656,688 | 10,139,059 | 2,924,776 | 435,349 | 470,976 | 63,240 | 14,033,400 |
| Other assets | 147,515 | 13,159 | 42,386 | 9,628 | 1,406 | 5,610,600 | 5,824,694 | 281,665 | 218,075 | 205,557 | 33,995 | 6,563,986 |
| Total Assets | 24,703,512 | 4,727,288 | 9,573,061 | 1,821,630 | 11,271,706 | 6,106,831 | 58,204,028 | 14,519,883 | 1,894,815 | 2,331,989 | 1,847,029 | 78,797,744 |
| Deposits from other | ||||||||||||
| credit institutions | 15,672 | 2,176,309 | 1,326,190 | 400 | 10,534,342 | (5,740,486) 8,312,427 | 1,359,620 | 268,128 | 249,594 | 449,210 | 10,638,979 | |
| Deposits from customers | 22,479,956 | 2,023,622 | 7,341,696 | 1,646,108 | 243,600 | 506,231 | 34,241,213 | 11,418,856 | 1,416,573 | 1,700,658 | 1,179,514 | 49,956,814 |
| Debt securities issued Other financial liabilities |
1,642,181 - |
4,940 - |
39 - |
154,502 - |
4,101 - |
5,518,670 2,891,270 |
7,324,433 2,891,270 |
418,664 425,534 |
- - |
26,135 - |
- | 7,769,232 (2,142) 3,314,662 |
| Other liabilities | 19,475 | 12,754 | 29,183 | 970 | 4,743 | 1,007,050 | 1,074,175 | 241,544 | 61,302 | 146,397 | 10,037 | 1,533,455 |
| Total Liabilities | 24,157,284 | 4,217,625 | 8,697,108 | 1,801,980 | 10,786,786 | 4,182,735 | 53,843,518 | 13,864,218 | 1,746,003 | 2,122,784 | 1,636,619 | 73,213,142 |
| Equity and non-controlling interests |
546,228 | 509,663 | 875,953 | 19,650 | 484,920 | 1,924,096 | 4,360,510 | 655,665 | 148,812 | 209,205 | 210,410 | 5,584,602 |
| Total Liabilities, Equity and non-controlling |
||||||||||||
| interests | 24,703,512 | 4,727,288 | 9,573,061 | 1,821,630 | 11,271,706 | 6,106,831 | 58,204,028 | 14,519,883 | 1,894,815 | 2,331,989 | 1,847,029 | 78,797,744 |
As at 30 September, 2013, the net contribution of the major geographic segments is analysed as follows:
| Portugal | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retail Banking |
Companies | Corporate and Banking |
Asset Ma nagement Investment and Private Banking |
Portfolio non core business |
Other | Total | Poland | Angola | Mozam- bique |
Other | Consoli dated |
|
| Income statement | ||||||||||||
| Interest income Interest expense |
452,004 (375,069) |
176,508 (83,068) |
311,349 (157,890) |
37,706 (46,445) |
288,481 | 165,851 (243,439) (261,350) |
1,431,899 | 480,036 (1,167,261) (281,250) (19,268) (45,467) (19,070) (1,532,316) |
67,068 | 135,260 | 31,810 | 2,146,073 |
| Net interest income | 76,935 | 93,440 | 153,459 | (8,739) | 45,042 | (95,499) | 264,638 | 198,786 | 47,800 | 89,793 | 12,740 | 613,757 |
| Commissions and other income |
256,557 | 50,770 | 88,939 | 16,410 | 19,969 | 41,348 | 473,993 | 130,191 | 25,090 | 60,597 | 19,214 | 709,085 |
| Commissions and other costs |
(11,044) | (3,642) | (6,842) | (1,037) | (55) (160,405) (183,025) | (29,638) | (3,136) (19,624) | (4,413) | (239,836) | |||
| Net commissions and other income Net gains arising from trading activity |
245,513 (19) |
47,128 - |
82,097 - |
15,373 - |
19,914 - |
(119,057) 67,495 |
290,968 67,476 |
100,553 39,185 |
21,954 25,127 |
40,973 16,432 |
14,801 1,153 |
469,249 149,373 |
| Staff costs and | ||||||||||||
| administrative costs Depreciations |
440,536 1,495 |
49,993 186 |
29,184 74 |
11,610 3 |
20,045 31 |
(20,558) 24,314 |
530,810 26,103 |
181,671 9,892 |
48,662 5,552 |
63,076 6,961 |
15,096 212 |
839,315 48,720 |
| Operating costs | 442,031 | 50,179 | 29,258 | 11,613 | 20,076 | 3,756 | 556,913 | 191,563 | 54,214 | 70,037 | 15,308 | 888,035 |
| Impairment and provisions |
(66,251) (185,598) | (149,949) | 572 | (277,235) (258,526) (936,987) | (40,469) | (6,259) (10,025) | (327) | (994,067) | ||||
| Share of profit of associates under the |
||||||||||||
| equity method Net gain from the sale |
- | - | - | - | - | 46,128 | 46,128 | 312 | - | - | - | 46,440 |
| of other assets | - | - | - | - | - | (29,127) | (29,127) | 1,823 | 47 | 5,699 | 3 | (21,555) |
| Net (loss) / income before income tax |
(185,853) | (95,209) | 56,349 | (4,407) | (232,355) (392,342) (853,817) | 108,627 | 34,455 | 72,835 | 13,062 | (624,838) | ||
| Income tax | 58,265 | 30,066 | (17,750) | 1,430 | 73,191 | 37,652 | 182,854 | (22,521) | (8,074) (12,592) | (1,254) | 138,413 | |
| (Loss) / income after income tax from continuing operations |
(127,588) | (65,143) | 38,599 | (2,977) | (159,164) (354,690) (670,963) | 86,106 | 26,381 | 60,243 | 11,808 | (486,425) | ||
| (Loss) / income arising from | ||||||||||||
| discontinued operations Net (loss) / income |
- | - | - | - | - | 1,277 | 1,277 | - | - | - | (44,838) | (43,561) |
| after income tax | (127,588) | (65,143) | 38,599 | (2,977) | (159,164) (353,413) (669,686) | 86,106 | 26,381 | 60,243 | (33,030) | (529,986) | ||
| Non-controlling interests Net (loss) / income after |
- | - | - | - | - | (5,113) | (5,113) | (29,697) (12,469) (20,061) | - | (67,340) | ||
| income tax | (127,588) | (65,143) | 38,599 | (2,977) | (159,164) (358,526) (674,799) | 56,409 | 13,912 | 40,182 | (33,030) | (597,326) | ||
| Balance sheet | ||||||||||||
| Cash and Loans and | ||||||||||||
| advances to credit institutions Loans and advances |
4,572,759 | 32,347 | 1,828,889 | 1,590,613 | 5,349 | (7,161,214) | 868,743 | 1,331,622 | 382,039 | 389,875 | 1,631,646 | 4,603,925 |
| to customers | 18,301,450 | 4,930,357 | 8,197,340 | 246,224 | 13,040,548 | 104,144 | 44,820,063 | 9,865,093 | 541,811 | 1,128,036 | 751,716 | 57,106,719 |
| Financial assets (*) | 178,135 | - | - | 50 | - | 12,218,132 | 12,396,317 | 2,208,487 | 264,693 | 358,992 | 87,038 | 15,315,527 |
| Other assets | 86,391 | 5,801 | 21,390 | 4,749 | 905 | 5,282,555 | 5,401,791 | 278,819 | 209,730 | 167,570 | 37,324 | 6,095,234 |
| Total Assets | 23,138,735 | 4,968,505 | 10,047,619 | 1,841,636 | 13,046,802 | 10,443,617 | 63,486,914 | 13,684,021 | 1,398,273 | 2,044,473 | 2,507,724 | 83,121,405 |
| Deposits from other | ||||||||||||
| credit institutions Deposits from customers |
- 20,582,714 |
2,963,847 1,588,443 |
1,547,348 7,448,280 |
761 1,609,223 |
12,047,818 315,042 |
1,272,159 | (3,994,191) 12,565,583 32,815,861 |
1,424,464 10,763,157 |
231,383 1,002,929 |
191,412 1,519,548 |
970,719 1,323,063 |
15,383,561 47,424,558 |
| Debt securities issued | 2,010,614 | 4,909 | 1,512 | 211,993 | 6,008 | 7,472,806 | 9,707,842 | 179,237 | - | 25,460 | - | 9,912,539 |
| Other financial liabilities | - | - | - | - | - | 5,219,263 | 5,219,263 | 472,767 | - | - | 24,823 | 5,716,853 |
| Other liabilities | 16,797 | 17,955 | 34,442 | 954 | - | 873,796 | 943,944 | 182,062 | 41,160 | 133,973 | 6,552 | 1,307,691 |
| Total Liabilities | 22,610,125 | 4,575,154 | 9,031,582 | 1,822,931 | 12,368,868 | 10,843,833 | 61,252,493 | 13,021,687 | 1,275,472 | 1,870,393 | 2,325,157 | 79,745,202 |
| Equity and non-controlling interests |
528,610 | 393,351 | 1,016,037 | 18,705 | 677,934 | (400,216) 2,234,421 | 662,334 | 122,801 | 174,080 | 182,567 | 3,376,203 | |
| Total Liabilities, Equity | ||||||||||||
| and non-controlling interests |
23,138,735 | 4,968,505 | 10,047,619 | 1,841,636 | 13,046,802 | 10,443,617 | 63,486,914 | 13,684,021 | 1,398,273 | 2,044,473 | 2,507,724 | 83,121,405 |
Description of the relevant items of reconciliation:
| Sep 2014 | Sep 2013 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net contribution (excluding minority interest effect) | ||
| Retail Banking in Portugal | (104,514) | (127,588) |
| Companies | (46,564) | (65,143) |
| Corporate and Investment Banking | 53,487 | 38,599 |
| Asset Management and Private Banking | 6,770 | (2,977) |
| Portfolio non core business | (218,192) | (159,164) |
| Foreign Business | 214,769 | 184,538 |
| Non-controlling interests (1) | (81,899) | (67,340) |
| (176,143) | (199,075) | |
| (Loss) / income from discontinued operations | (34,070) | (43,561) |
| (210,213) | (242,636) | |
| Amounts not allocated to segments: | ||
| Interests of hybrid instruments | (162,751) | (201,104) |
| Net interest income of the bond portfolio | 86,210 | 84,509 |
| Interests written off | (44,013) | (54,417) |
| Cost of debt issue with State Guarantee | (22,689) | (47,774) |
| Own Credit Risk | (2,881) | (7,529) |
| Impact of exchange rate hedging of investments | (6,290) | 2,168 |
| Equity accounted earnings | 28,221 | 46,128 |
| Impairment and other provisions (2) | (169,272) | (258,526) |
| Operating expenses | - | (3,755) |
| Gain on sale of the non life insurance business | 69,396 | - |
| Impacts of investment in Piraeus Bank | - | 79,059 |
| Gains on disposal of public debt | 260,291 | 49,491 |
| Others (3) | 75,734 | (42,940) |
| Total not allocated to segments | 111,956 | (354,690) |
| Consolidated net (loss) / income | (98,257) | (597,326) |
(1) Corresponds mainly to the income attributable to third parties related to the subsidiaries in Poland, in Mozambique and in Angola;
(2) Includes provisions for property in kind, administrative infractions, various contingencies and other unallocated to business segments. (3) Includes funding for non interest bearing assets and the financial strategies as well as tax effect associated with the items previously discriminated.
As at 30 September 2014 the Banco Comercial Português Group's subsidiary companies included in the consolidated accounts using the full consolidation method were as follows:
| Group | Bank | |||||||
|---|---|---|---|---|---|---|---|---|
| Subsidiary companies | Head office |
Share capital |
Currency | Activity | % control |
% held |
% held |
|
| Banco de Investimento Imobiliário, S.A. | Lisbon | 17,500,000 | EUR | Banking | 100.0 | 100.0 | 100.0 | |
| Banco ActivoBank, S.A. | Lisbon | 17,500,000 | EUR | Banking | 100.0 | 100.0 | – | |
| Banca Millennium S.A. | Bucharest | 303,195,000 | RON | Banking | 100.0 | 100.0 | – | |
| Banco Millennium Angola, S.A. | Luanda | 4,009,893,495 | AOA | Banking | 50.1 | 50.1 | – | |
| Bank Millennium, S.A. | Warsaw | 1,213,116,777 | PLN | Banking | 65.5 | 65.5 | 65.5 | |
| Banque Privée BCP (Suisse) S.A. | Geneve | 70,000,000 | CHF | Banking | 100.0 | 100.0 | – | |
| BIM - Banco Internacional de Moçambique, S.A. |
Maputo | 4,500,000,000 | MZN | Banking | 66.7 | 66.7 | – | |
| Millennium bcp Bank & Trust | George Town | 340,000,000 | USD | Banking | 100.0 | 100.0 | – | |
| BCP Finance Bank, Ltd. | George Town | 246,000,000 | USD | Banking | 100.0 | 100.0 | – | |
| BCP Finance Company | George Town | 202,176,195 | EUR | Investment | 100.0 | 15.3 | – | |
| Caracas Financial Services, Limited | George Town | 25,000 | USD | Financial Services | 100.0 | 100.0 | 100.0 | |
| MB Finance AB | Stockholm | 500,000 | SEK | Investment | 100.0 | 65.5 | – | |
| Millennium BCP - Escritório de Representações e Serviços, Ltda. |
Sao Paulo | 45,205,149 | BRL | Financial Services | 100.0 | 100.0 | 100.0 | |
| BCP International B.V. | Amsterdam | 18,000 | EUR | Holding company | 100.0 | 100.0 | 100.0 | |
| BCP Investment B.V. | Amsterdam | 620,774,050 | EUR | Holding company | 100.0 | 100.0 | 100.0 | |
| bcp holdings (usa), Inc. | Newark | 250 | USD | Holding company | 100.0 | 100.0 | – | |
| BCP África, S.G.P.S., Lda. | Funchal | 25,000 | EUR | Holding company | 100.0 | 100.0 | 100.0 | |
| Bitalpart, B.V. | Rotterdam | 19,370 | EUR | Holding company | 100.0 | 100.0 | 100.0 | |
| Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda. |
Funchal | 25,000 | EUR | Holding company | 100.0 | 100.0 | 100.0 | |
| BCP Capital - Sociedade de Capital de Risco, S.A. |
Oeiras | 2,000,000 | EUR | Venture capital | 100.0 | 100.0 | 100.0 | |
| BG Leasing, S.A. | Gdansk | 1,000,000 | PLN | Leasing | 74.0 | 48.5 | – | |
| BII Investimentos International, S.A. | Luxembourg | 150,000 | EUR | Investment fund management | 100.0 | 100.0 | – | |
| Enerparcela - Empreendimentos Imobiliários, S.A. Alverca | 8,850,000 | EUR | Real-estate management | 100.0 | 100.0 | – | ||
| Imábida - Imobiliária da Arrábida, S.A. (*) | Oeiras | 1,750,000 | EUR | Real-estate management | 100.0 | 100.0 | 100.0 | |
| Interfundos - Gestão de Fundos de Investimento Imobiliários, S.A. |
Oeiras | 1,500,000 | EUR | Investment fund management | 100.0 | 100.0 | 100.0 | |
| Adelphi Gere, Investimentos Imobiliários, S.A. | Lisbon | 2,550,000 | EUR | Real-estate management | 100.0 | 100.0 | – | |
| Sadamora - Investimentos Imobiliários, S.A. | Lisbon | 1,000,000 | EUR | Real-estate management | 100.0 | 100.0 | – | |
| Millennium bcp - Prestação de Serviços, A. C. E. |
Lisbon | 331,000 | EUR | Services | 93.8 | 94.3 | 78.0 | |
| Millennium Dom Maklerski, S.A. | Warsaw | 16,500,000 | PLN | Services | 100.0 | 65.5 | – |
| Group | Bank | ||||||
|---|---|---|---|---|---|---|---|
| Subsidiary companies | Head office |
Share capital |
Currency | Activity | % control |
% held |
% held |
| Millennium Leasing, Sp.z o.o. | Warsaw | 48,195,000 | PLN | Leasing | 100.0 | 65.5 | – |
| Millennium Service, Sp.z o.o. | Warsaw | 1,000,000 | PLN | Services | 100.0 | 65.5 | – |
| Millennium Telecomunication, Sp.z o.o. | Warsaw | 100,000 | PLN | Brokerage services | 100.0 | 65.5 | – |
| Millennium TFI - Towarzystwo Funduszy Inwestycyjnych, S.A. |
Warsaw | 10,300,000 | PLN | Investment fund management | 100.0 | 65.5 | – |
| Millennium bcp Gestão de Activos - Sociedade Gestora de Fundos de Investimento, S.A. |
Oeiras | 1,000,000 | EUR | Investment fund management | 100.0 | 100.0 | 100.0 |
| Millennium bcp Teleserviços - Serviços de Comércio Electrónico, S.A. |
Lisbon | 50,004 | EUR | Videotext services | 100.0 | 100.0 | 100.0 |
| MBCP REO I, LLC | Delaware | 1,389,835 | USD | Real-estate management | 100.0 | 100.0 | – |
| MBCP REO II, LLC | Delaware | 7,241,390 | USD | Real-estate management | 100.0 | 100.0 | – |
| Millennium bcp Imobiliária, S.A. | Oeiras | 50,000 | EUR | Real-estate management | 99.9 | 99.9 | 99.9 |
| Propaço- Sociedade Imobiliária De Paço D'Arcos, Lda |
Oeiras | 5,000 | EUR | Real-estate company | 52.7 | 52.7 | 52.7 |
| QPR Investimentos, S.A. (*) | Oeiras | 50,000 | EUR | Advisory and services | 100.0 | 100.0 | 100.0 |
| Servitrust - Trust Management Services S.A. |
Funchal | 100,000 | EUR | Trust services | 100.0 | 100.0 | 100.0 |
| TBM Sp.z o.o. | Warsaw | 500,000 | PLN | Advisory and services | 100.0 | 65.5 | – |
| Irgossai - Urbanização e construção, S.A. (*) | Lisbon | 50,000 | EUR | Construction and sale of real estate projects |
100.0 | 100.0 | 100.0 |
(*) - Companies classified as non-current assets held for sale
As referred in the accounting policy presented in note 1 b), the Group also consolidates under the full consolidation method the following Investment Funds: "Fundo de Investimento Imobiliário Imosotto Acumulação", "Fundo de Investimento Imobiliário Gestão Imobiliária", "Fundo de Investimento Imobiliário Imorenda", "Fundo Especial de Investimento Imobiliário Oceânico II", "Fundo Especial de Investimento Imobiliário Fechado Stone Capital", "Fundo Especial de Investimento Imobiliário Fechado Sand Capital", "Fundo de Investimento Imobiliário Fechado Gestimo", "M Inovação - Fundo de Capital de Risco BCP Capital", "Fundo Especial de Investimento Imobiliário Fechado Intercapital", "Millennium Fundo de Capitalização - Fundo de Capital de Risco", "Funsita - Fundo Especial de Investimento Imobiliário Fechado", "Imoport - Fundo de Investimento Imobiliário Fechado", "Multiusos Oriente - Fundo Especial de Investimento Imobiliário Fechado" and "Grand Urban Investment Fund - Fundo Especial de Investimento Imobiliário Fechado". In September 2014, it was included in the consolidated perimeter the fund Fundial – Fundo Especial de Investimento Imobiliário Fechado.
As at 30 September 2014 the Banco Comercial Português Group's associated companies, were as follows:
| Group | Bank | ||||||
|---|---|---|---|---|---|---|---|
| Associated companies | Head office |
Share capital |
Currency | Activity | % control |
% held |
% held |
| Banque BCP, S.A.S. | Paris | 103,689,744 | EUR | Banking | 19.9 | 19.9 | 19.9 |
| Banque BCP, S.A. (**) | Luxembourg | 18,500,000 | EUR | Banking | 8.8 | 8.8 | – |
| Academia Millennium Atlântico | Luanda | 47,500,000 | AOA | Education | 33.0 | 16.5 | – |
| ACT-C-Indústria de Cortiças, S.A. | Sta.Maria Feira | 17,923,610 | EUR | Extractive industry | 20.0 | 20.0 | 20.0 |
| Baía de Luanda - Promoção, Montagem e Gestão de Negócios, S.A. (**) |
Luanda | 19,200,000 | USD | Services | 10.0 | 10.0 | – |
| Beira Nave | Beira | 2,849,640 | MZN | Naval shipyards | 22.8 | 13.7 | – |
| Constellation, S.A. | Maputo | 1,053,500,000 | MZN | Property management | 20.0 | 12.0 | – |
| Luanda Waterfront Corporation (**) | George Town | 10,810,000 | USD | Services | 10.0 | 10.0 | – |
(**) - Given the nature of the Group's involvement, the Board of Directors believes that the Group maintains a significant influence on the companies.
| Associated companies | Head office |
Share capital |
Currency | Activity | Group | Bank | |
|---|---|---|---|---|---|---|---|
| % | % | % | |||||
| control | held | held | |||||
| Flitptrell III SA | Lisbon | 50,000 | EUR | Turism | 50.0 | 50.0 | 50.0 |
| Lubuskie Fabryki Mebli, S.A. | Swiebodzin | 13,400,050 | PLN | Furniture manufacturer | 50.0 | 32.8 | – |
| Nanium, S.A. | Vila do Conde | 15,000,000 | EUR | Electronic equipments | 41.1 | 41.1 | 41.1 |
| Quinta do Furão - Sociedade de Animação Turística e Agrícola de Santana, Lda |
Funchal | 1,870,492 | EUR | Tourism | 31.3 | 31.3 | 31.3 |
| SIBS, S.G.P.S., S.A. | Lisbon | 24,642,300 | EUR | Banking services | 21.9 | 21.9 | 21.5 |
| Sicit - Sociedade de Investimentos e Consultoria em Infra-Estruturas de Transportes, S.A |
Oeiras | 50,000 | EUR | Advisory and services | 25.0 | 25.0 | 25.0 |
| UNICRE - Instituição Financeira de Crédito, S.A. | Lisbon | 10,000,000 | EUR | Credit cards | 32.0 | 32.0 | 31.7 |
| VSC - Aluguer de Veículos Sem Condutor, Lda. |
Lisbon | 5,000 | EUR | Long term rental | 50.0 | 50.0 | – |
As at 30 September 2014 the Banco Comercial Português Group's subsidiary and associated insurance companies included in the consolidated accounts under the full consolidation method and equity method were as follows:
| Group | |||||||
|---|---|---|---|---|---|---|---|
| Head | Share | % | % | % | |||
| Subsidiary companies | office | capital | Currency | Activity | control | held | held |
| S&P Reinsurance Limited | Dublin | 1,500,000 | EUR | Life reinsurance | 100.0 | 100.0 | 100.0 |
| SIM - Seguradora Internacional de | Maputo | 147,500,000 | MZN | Insurance | 89.9 | 60.0 | – |
| Moçambique, S.A.R.L. |
| Associated companies | Head office |
Share capital |
Currency | Activity | Group | Bank | ||
|---|---|---|---|---|---|---|---|---|
| % control |
% held |
% held |
||||||
| Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. |
Oeiras | 775,002,375 | EUR | Holding company | 49.0 | 49.0 | – | |
| Ocidental - Companhia Portuguesa de Seguros de Vida, S.A. |
Oeiras | 22,375,000 | EUR | Life insurance | 49.0 | 49.0 | – | |
| Pensõesgere, Sociedade Gestora Fundos de Pensões, S.A. |
Oeiras | 1,200,000 | EUR | Pension fund management | 49.0 | 49.0 | – |
During the first semester of 2014, it was included in the consolidated perimeter the company Irgossai - Urbanização e construção, S.A.. Additionally, in June 2014, the Group sold the investments held in Ocidental – Companhia Portuguesa de Seguros, S.A. and in Médis – Companhia Portuguesa de Seguros de Saúde, S.A.
The Group held a set of securitization transactions regarding mortgage loans, consumer loans and corporate loans which were set through specifically created SPE. As referred in accounting policy 1 b), when the substance of the relationships with the SPEs indicates that the Group holds control of its activities, the SPE are fully consolidated, following the application of IFRS 10.
Banco Comercial Português, S.A., ("BCP") hereby informs that it signed an agreement today with the CIMD Group, headquartered in Madrid, for the sale of the entire share capital of Millennium bcp Gestão de Activos - Sociedade Gestora de Fundos de Investimento, S.A., ("MGA").
The agreed price for the sale of the share capital of MGA is Euros 15,750,000. The operation, subject to Supervision entities approval, is expected to have a positive impact on the consolidated capital ratios of BCP, i.e. an increase in common equity tier 1 ratio of 3 bp in accordance with the phased-in approach and of 4 bp on a fully implemented base.
This transaction marks another step by BCP, ahead of the deadline, to comply with the agreement signed by the Directorate-General for Competition of the European Commission and the Portuguese Authorities concerning the bank's restructuring plan, in line with its strategic plan.
BCP will continue to distribute the investment funds managed by MGA. BCP is the custodian for these funds.
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