Quarterly Report • May 2, 2016
Quarterly Report
Open in ViewerOpens in native device viewer
* Core income = net interest income + net fees and commission income; Core net income = core income – operating costs.
Note: above-presented business indicators exclude from the full-consolidation perimeter BMA's operation in Angola.
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 4,094,235,361.88
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]
| 31 Mar. 16 | 31 Mar. 15 | Change 16 / 15 |
|
|---|---|---|---|
| Balance sheet | |||
| Total assets | 76,295 | 78,313 | -2.6% |
| Loans to customers (gross) (1) | 53,787 | 57,006 | -5.6% |
| Total customer funds (1) | 63,818 | 64,837 | -1.6% |
| Balance sheet customer funds (1) | 51,677 | 52,010 | -0.6% |
| Customer deposits (1) | 49,553 | 49,212 | 0.7% |
| Loans to customers, net / Customer deposits (2) | 101% | 108% | |
| Loans to customers, net / Balance sheet customer funds (3) | 96% | 102% | |
| Results Net income |
46.7 | 70.4 | -33.7% |
| Net interest income | 292.4 | 297.8 | -1.8% |
| Net operating revenues | 488.1 | 642.2 | -24.0% |
| Operating costs | 243.1 | 254.3 | -4.4% |
| Loan impairment charges (net of recoveries) | 160.7 | 201.0 | -20.1% |
| Other impairment and provisions | 15.4 | 70.1 | -78.1% |
| Income taxes | |||
| Current | 24.6 | 29.6 | |
| Deferred Profitability |
(9.6) | 3.2 | |
| Net operating revenues / Average net assets (2) | 2.6% | 3.4% | |
| Return on average assets (ROA) (4) | 0.4% | 0.5% | |
| Income before tax and non-controlling interests / Average net assets (2) | 0.5% | 0.7% | |
| Return on average equity (ROE) Income before tax and non-controlling interests / Average equity (2) |
4.1% | 6.9% | |
| 7.0% | 10.8% | ||
| Credit quality Overdue loans and doubtful loans / Total loans (2) |
9.4% | 9.6% | |
| Overdue loans and doubtful loans, net / Total loans, net (2) | 3.3% | 3.6% | |
| Credit at risk / Total loans (2) | |||
| Credit at risk, net / Total loans, net (2) | 11.5% | 12.1% | |
| 5.5% | 6.2% | ||
| Impairment for loan losses / Overdue loans by more than 90 days (1) Efficiency ratios (2) (5) |
86.0% | 85.4% | |
| Operating costs / Net operating revenues | 49.4% | 39.6% | |
| Operating costs / Net operating revenues (Portugal) | 49.6% | 36.0% | |
| Staff costs / Net operating revenues | 28.0% | 22.3% | |
| Capital (6) | |||
| Common equity tier I phased-in | 12.8% | 11.5% | |
| Common equity tier I fully implemented Branches (3) |
10.0% | 8.7% | |
| Portugal activity | 662 | 695 | -4.7% |
| Foreign activity Employees (3) |
667 | 674 | -1.0% |
| Portugal activity | 7,436 | 7,676 | -3.1% |
| Foreign activity | 9,673 | 9,753 | -0.8% |
(1) Adjusted from the effect related to the classification of Millennium bcp Gestão de Activos and Banco Millennium in Angola as discontinued operations. 82,348 -4.9%
(2) According to Instruction from the Bank of Portugal no. 16/2004, as the currently existing version including Banco Millennium in Angola.
(3) Includes discontinued operations.
(4) Considering net income before non-controlling interests.
(5) Excludes the impact of specific items: restructuring costs (Euro 1,8 million in 2016).
(6) According with CRD IV/CRR.
Considering the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp) regarding the Bank's Restructuring Plan, in particular the implementation of a new approach to the asset management business, and in accordance with IFRS 5, the activity of Millennium bcp Gestão de Activos was classified as discontinued operations during 2013.
From this date onwards, the impact on results of these operations was presented on a separate line item in the profit and loss account, defined as "income arising from discontinued operations" with no change at balance sheet level from the criteria as that of the financial statements as at 31 March 2015. However, following the sale of the total shareholding in Millennium bcp Gestão de Activos, in May 2015, its assets and liabilities are no longer considered from this date onwards.
Similarly, with regard to Banco Millennium in Angola, following the agreement with the largest shareholder of Banco Privado Atlântico to merge the two entities, the approval of the respective merger plan and the granting of the necessary authorizations to complete this operation, Banco Millennium in Angola was also considered as a discontinued operation in March 2016 and its financial statements presented in accordance with the criteria referred to in relation to Millennium bcp Gestão de Activos, including the financial statements of the same period of 2015.
The net income of Millennium bcp amounted to Euro 46.7 million in the first quarter of 2016, compared to Euro 70.4 million posted in the same period of 2015, and core income reached Euro 213,2 million registering a year-on-year increase of 3.6%.
Net income's performance reflects the booking of net trading gains related with the sale of Portuguese sovereign debt securities in the first quarter of 2015 in the amount of Euro 116 million, after tax, as a result of market opportunities in the activity in Portugal that were not repeated in the same period of 2016, partially mitigated by a lower level of impairment losses and provisions charges and the strict control of operating costs.
Net income in the international activity totalled Euro 44.8 million in the first quarter of 2016, compared to Euro 54.9 million recorded in the same period of 2015, hindered by the introduction of a new tax on the Polish banking sector and the impact derived from the depreciation of the metical and the kwanza against the euro.
Net interest income stood at Euro 292.4 million in the first quarter of 2016, compared to Euro 297.8 million registered in the same period of 2015.
The performance of net interest income in Portugal benefited from the positive contribution of the commercial margin, supported on the reduction of 82 basis points of term deposits cost, penalised by the decrease of the yield of Portuguese sovereign debt portfolio related with interest rates trend, which determined a 2.2% decrease compared with the same period of 2015. Excluding this impact, net interest income in Portugal increased 7.5%.
In the international activity, net interest income decreased 1.3% compared with the first quarter of 2015; however, excluding exchange rate impact, net interest income increased by 10.4% from the first quarter of 2015, grounded on net interest margin and loans to customers and deposits volume's increases, mainly in the subsidiary in Mozambique.
Net interest margin in the first quarter of 2016 stood at 1.81%, similar to the one registered in the same period of 2015. Excluding the impact from the cost of CoCos, net interest margin reached 1.91% in the first quarter of 2016 and 1.90% in the same period of 2015.
| AVERAGE BALANCES | Euro million | |||
|---|---|---|---|---|
| 31 Mar.16 | 31 Mar.15 | |||
| Amount | Yield % | Amount | Yield % | |
| Deposits in banks | 3,351 | 0.49 | 3,212 | 0.80 |
| Financial assets | 10,057 | 2.17 | 9,502 | 3.31 |
| Loans and advances to customers | 50,509 | 3.27 | 53,279 | 3.54 |
| Interest earning assets | 63,917 | 2.95 | 65,993 | 3.37 |
| Discontinued operations (1) | 2,219 | 1,916 | ||
| Non-interest earning assets | 9,676 | 9,580 | ||
| 75,812 | 77,489 | |||
| Amounts owed to credit institutions | 10,106 | 0.45 | 11,380 | 0.60 |
| Amounts owed to customers | 49,275 | 0.81 | 48,345 | 1.34 |
| Debt issued | 4,668 | 3.51 | 5,745 | 3.32 |
| Subordinated debt | 1,654 | 7.38 | 2,043 | 6.12 |
| Interest bearing liabilities | 65,703 | 1.11 | 67,513 | 1.53 |
| Discontinued operations (1) | 1,858 | 1,696 | ||
| Non-interest bearing liabilities Shareholders' equity and non-controlling |
2,590 | 3,097 | ||
| interests | 5,661 | 5,183 | ||
| 75,812 | 77,489 | |||
| Net interest margin | 1.81 | 1.81 | ||
| Net interest margin (excl. cost of CoCos) | 1.91 | 1.90 |
Note: Interest related to hedge derivatives were allocated, in March 2016 and 2015, to the respective balance sheet item.
(1) Includes the activity of the subsidiary in Angola and of Millennium bcp Gestão de Ativos (in 2015), as well as the respective consolidation adjustments.
Net commissions reached Euro 163.9 million in the first quarter of 2016, an increase of 1.0% from the amount registered in the same period of 2015, boosted by the activity in Portugal, which increased 11.8%.
The performance of net commissions in the first quarter of 2016 reflects the 3.6% increase in commissions related to the banking business, supported by higher current accounts-related commissions in the activity in Portugal, in spite of the lower commissions from cards and transfers, mainly hindered by the exchange rate effects in the international activity. The commissions associated with financial markets decreased 10.2%, determined by the lower level of securities transactions in the international activity.
Net trading income totalled Euro 28.3 million in the first quarter of 2016, compared to Euro 191.3 million posted in the same period of 2015, driven by the gains related with Portuguese sovereign debt securities in the amount of Euro 164.0 million booked in the first quarter of 2015 in Portugal.
Other net operating income was negative by Euro 12.4 million in the first quarter of 2016 from Euro 17.2 million registered in the same period of 2015. This performance was determined by the contributions for the banking sector, for the Deposit Guarantee Fund and for the Single Resolution Fund booked in Portugal in the first quarter of 2015 and which were not material in the same period of 2016, notwithstanding the international activity's performance, penalised by the introduction of a new tax on the banking sector in Poland.
Dividends from equity instruments, which comprises dividends received from investments in financial assets available for sale, and equity accounted earnings, jointly amounted to Euro 15.9 million in the first quarter of 2016, a Euro 7.9 million increase compared with Euro 8.0 million posted in the same period of 2015.
| OTHER NET INCOME | Euro million | ||
|---|---|---|---|
| 31 Mar. 16 | 31 Mar. 15 | Change 16/15 |
|
| Net commissions | 163.9 | 162.3 | 1.0% |
| Banking commissions | 136.3 | 131.5 | 3.6% |
| Cards and transfers | 35.0 | 38.8 | -9.7% |
| Credit and guarantees | 38.9 | 37.7 | 3.1% |
| Bancassurance | 20.2 | 19.1 | 5.6% |
| Current account related | 22.6 | 18.9 | 19.5% |
| Other commissions | 19.6 | 17.0 | 15.4% |
| Market related commissions | 27.7 | 30.8 | -10.2% |
| Securities | 19.1 | 21.4 | -10.6% |
| Asset management | 8.6 | 9.4 | -9.2% |
| Net trading income | 28.3 | 191.3 | -85.2% |
| Other net operating income | (12.4) | (17.2) | - |
| Dividends from equity instruments | 2.0 | 2.0 | 4.8% |
| Equity accounted earnings | 13.9 | 6.1 | 129.0% |
| Total other net income | 195.8 | 344.4 | -43.2% |
| Other net income / Net operating revenues | 40.1% | 53.6% |
Operating costs, excluding the effect of specific items related with restructuring costs, stood at Euro 241.3 million in the first quarter of 2016, a year-on-year decrease of 5.1% compared to Euro 254.3 million posted in the same period of 2015, materialising the cost saving initiatives in the activity in Portugal established in the Strategic Plan.
In the first quarter of 2016, operating costs in Portugal, excluding specific items, decreased by 3.2% compared to the same period of 2015, mainly supported on staff costs savings induced by the reduction of number of employees.
In the international activity, operating costs decreased 8.3%; however, excluding exchange rate effect, operating costs increased 2.9% compared to the first quarter of 2015, mainly influenced by the subsidiary in Mozambique.
Staff costs, excluding the impact of the above-mentioned specific items, totalled Euro 136.6 million in the first quarter of 2016, a 4.8% reduction from the same period of 2015, on the back of the 3.3% decrease in the activity in Portugal, boosted by the 240 reduction in the number of employees from the end of the first quarter of 2015, in spite of the 3.0% increase in the international activity, excluding exchange rate effect.
Other administrative costs decreased 5.4% standing at Euro 91.8 million in the first quarter of 2016, from Euro 97.1 million in the same period of 2015, as a result of the operational efficiency improvement initiatives that have been implemented in the scope of the Strategic Plan, namely the resizing of the distribution network in Portugal, reflected in a decrease of 33 branches compared to 31 March 2015. In the international activity, other administrative costs increased 1.7% compared to the same period of 2015, excluding exchange rate effects, determined by the operation in Mozambique.
Depreciation costs amounted to Euro 12.8 million in the first quarter of 2016, a 7.1% year-on-year decrease from the Euro 13.8 million registered in the same period of 2015, mainly influenced by the 8.4% decrease registered in the activity in Portugal, induced by lower real estate and software related depreciation costs. In
the international activity, depreciation costs increased, excluding exchange rate impact, 10.6% compared to the first quarter of 2015, influenced by the subsidiaries in Poland and Mozambique.
| OPERATING COSTS | Euro million | ||
|---|---|---|---|
| 31 Mar. 16 | 31 Mar. 15 | Change 16/15 |
|
| Staff costs | 136.6 | 143.4 | -4.8% |
| Other administrative costs | 91.8 | 97.1 | -5.4% |
| Depreciation | 12.8 | 13.8 | -7.1% |
| Subtotal (1) | 241.3 | 254.3 | -5.1% |
| Specific items | |||
| Restructuring costs | 1.8 | – | |
| Operating costs | 243.1 | 254.3 | -4.4% |
| Of which: | |||
| Portugal activity (1) | 153.0 | 158.2 | -3.2% |
| Foreign activity | 88.2 | 96.2 | -8.3% |
(1) Excludes the impact of specific items presented in the table.
Impairment for loan losses (net of recoveries) stood at Euro 160.7 million in the first quarter of 2016, compared to Euro 201.0 million recorded in the same date of 2015, in line with the guidelines set out in the Strategic Plan, reflected in a still relevant provisioning effort, but trending downwards, that enabled the improvement of cost of risk from 141 basis points in the first quarter of 2015 to 119 basis points at the end of March 2016.
Other impairment and provisions totalled Euro 15.4 million in the first quarter of 2016, compared to Euro 70.1 million in the same period of 2015, mainly as a result of lower provisions for repossessed assets and for guarantees and commitments.
Income tax (current and deferred) amounted to Euro 15.0 million in the first quarter of 2016, compared with Euro 32.8 million posted in the same period of 2015.
These taxes include current tax costs of Euro 24.6 million (Euro 29.6 million in the first quarter of 2015) net of deferred tax income of Euro -9.6 million (Euro 3.2 million in the same period of 2015).
Total assets amounted to Euro 76,295 million as at 31 March 2016, compared with Euro 78,313 million as at 31 March 2015, reflecting loans to customers' portfolio retraction, in spite of the increase in the securities portfolio, mainly related with the treasury bonds portfolio.
Loans to customers (gross) stood at Euro 53,787 million as at 31 March 2016, compared with Euro 57,006 million posted in the same date of 2015, induced by the decrease in the activity in Portugal, in spite of the increase recorded in the international activity, excluding exchange rate effect.
Loans to customers in Portugal decreased 5.3% compared to 31 March 2015, reflecting the still moderate recovery of the Portuguese economy, materialised in the combined effect of the 3.6% decrease in loans to individuals, determined by the repayments associated with mortgage loans, together with the 6.9% retraction in loans to companies, compared to the amount registered at the end of March 2015, despite the efforts made in order to properly ensure the companies and individuals financing needs.
Excluding the impact of the loan portfolio associated with the operation in Angola, classified as discontinued operation, and the exchange rate effect, loans to customers in the international activity increased 0.5%
compared to the end of March 2015, driven by loans to both individuals and to companies increases in the operation in Mozambique.
The structure of the loans to customers' portfolio showed identical and stable levels of diversification between the end of March 2015 and 2016, with loans to companies representing 46% of total loans to customers as at 31 March 2016.
LOANS TO CUSTOMERS (GROSS) Euro million
| 31 Mar. 16 | 31 Mar. 15 | Change 16/15 |
|
|---|---|---|---|
| Individuals | 28,784 | 30,087 | -4.3% |
| Mortgage | 24,807 | 26,024 | -4.7% |
| Consumer and others | 3,977 | 4,062 | -2.1% |
| Companies | 25,003 | 26,919 | -7.1% |
| Services | 9,858 | 10,626 | -7.2% |
| Commerce | 3,206 | 3,243 | -1.2% |
| Construction | 3,309 | 3,902 | -15.2% |
| Other | 8,631 | 9,149 | -5.7% |
| Subtotal | 53,787 | 57,006 | -5.6% |
| Discontinued operations | 847 | 1,097 | |
| Total | 54,634 | 58,102 | -6.0% |
| Of which (1): | |||
| Portugal activity | 41,178 | 43,475 | -5.3% |
| Foreign activity | 12,609 | 13,531 | -6.8% |
Credit quality, determined by loans overdue by more than 90 days as a percentage of total loans, adjusted for discontinued operations, stood at 7.4% as at 31 March 2016, compared with 7.3% posted in the same date of 2015, and the coverage ratio for loans overdue by more than 90 day improved from 85.4% as at 31 March 2015 to 86.0% as at 31 March 2016.
The credit at risk ratio stood at 11.5% of total loans as at 31 March 2016, which compares with 12.1% as at 31 March 2015. As at 31 March 2016, the restructured loans ratio reached 9.9% of total loans, a favourable performance from the 10.7% posted at the end of March 2015 and the restructured loans not included in credit at risk ratio stood at 5.7% of total loans as at 31 March 2016 (6.7% as at 31 March 2015).
| Overdue loans by more than 90 days |
Impairment for loan losses |
Overdue loans by more than 90 days /Total loans |
Euro million Coverage ratio (Impairment/ Overdue >90 days) |
|
|---|---|---|---|---|
| Individuals | 858 | 793 | 3.0% | 92.4% |
| Mortgage | 290 | 348 | 1.2% | 119.9% |
| Consumer and others | 568 | 445 | 14.3% | 78.3% |
| Companies | 3,100 | 2,613 | 12.4% | 84.3% |
| Services | 1,147 | 1,121 | 11.6% | 97.7% |
| Commerce | 324 | 283 | 10.1% | 87.3% |
| Construction | 1,046 | 599 | 31.6% | 57.3% |
| Other | 583 | 610 | 6.8% | 104.7% |
| Subtotal (1) | 3,958 | 3,406 | 7.4% | 86.0% |
| Discontinued operations | 37 | 45 | 4.4% | 120.1% |
| Total | 3,995 | 3,451 | 7.3% | 86.4% |
(1) Adjusted of the impacts associated with discontinued operations (Banco Millennium in Angola).
Total customer funds, excluding the impact associated with discontinued operations, amounted to Euro 63,818 million as at 31 March 2016, a decrease of 1.6% compared to 64,837 million posted as at 31 March 2015, hindered by exchange rate effects in the international activity in spite of customer deposits positive performance.
Total customer funds in Portugal totalled Euro 47,750 million as at 31 March 2016, from Euro 48,256 million registered at the end of March 2015, induced by the decreases of Euro 406 million in capitalisation products and Euro 652 million in debt securities owed to customers which was partially offset by the Euro 617 million increase in customer deposits, driven by the commercial effort on funding acquisition and the conversion of structured products to deposits upon maturity.
In the international activity, total customer funds, excluding discontinued operations, decreased 3.1% standing at Euro 16,068 million as at 31 March 2016 (Euro 16,581 million as at 31 March 2015), determined by the exchange rate depreciation of the metical and the zloty against the euro. Excluding exchange rate effect, total customer funds increased 4.3%.
As at 31 March 2016, excluding discontinued operations, balance sheet customer funds represented 81% of total customer funds, with customer deposits representing 78% of total customer funds.
Improvement of loan to deposits ratio to stand at 101% as at 31 March 2016, compared to 108% as at 31 March 2015, boosted by commercial gap reduction of Euro 3.6 million. The same ratio, considering total balance sheet customer funds, reached 96% (102% as at 31 March 2015).
| TOTAL CUSTOMER FUNDS (1) | Euro million | ||
|---|---|---|---|
| 31 Mar. 16 | 31 Mar. 15 | Change 16/15 |
|
| Balance sheet customer funds | 51,677 | 52,010 | -0.6% |
| Deposits | 49,553 | 49,212 | 0.7% |
| Debt securities | 2,124 | 2,798 | -24.1% |
| Off-balance sheet customer funds | 12,141 | 12,826 | -5.3% |
| Assets under management | 3,778 | 3,961 | -4.6% |
| Capitalisation products | 8,363 | 8,865 | -5.7% |
| Total | 63,818 | 64,837 | -1.6% |
(1) Excludes the impact from discontinued operations (Millennium bcp Gestão de Activos and Banco Millennium in Angola) in the amount of Euro
1,461 million in March 2016 and Euro 3,137 million in March 2015.
The securities portfolio stood at Euro 14,145 million as at 31 March 2016, compared with Euro 12,616 million in the same period of 2015, representing 18.5% of total assets as at 31 March 2016, above the amount registered as at 31 March 2015 (16.1% of total assets), mainly related with the treasury bonds portfolio.
During the first quarter of 2016 the consolidated wholesale funding needs of the Bank increased by approximately Euro 1.9 billion, due to the reinforcement of the portfolio of Portuguese sovereign debt (Euro 1.6 billion), to the increase of the liquidity deposited in the Bank of Portugal (Euro 0.5 billion) and to the reduction of the commercial gap in Portugal (Euro 0.3 billion).
With the refinancing of medium-long term debt limited to Euro 0.1 billion, through early redemption, the increase of funding needs, compared to December 2015, was enabled through the increases of repo net funding (by Euro 1.1 billion to a balance of Euro 2.1 billion), loans from banks (by Euro 0.3 billion to a balance of Euro 1.3 billion) and borrowings with the Eurosystem (Euro 0.5 billion to Euro 6.0 billion).
In net terms, the funding with the Eurosystem remained stable compared to December 2015 at Euro 5.3 billion which, considering the slight reduction in the portfolio of eligible assets, enabled the liquidity buffer to keep a comfortable level of Euro 8.5 billion.
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 from 1 January 2014 onwards.
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 (phased-in) in which institutions may accommodate the new requirements, both in terms of own funds and compliance with minimum capital ratios.
According to our interpretation of CRD IV/CRR to date, CET1 phased-in estimated ratio reached 12.8% as at 31 March 2016 and 13.2% pro forma, considering the merger between Banco Millennium Angola and Banco Privado Atlântico, S.A., compared to 13.3% as at 31 December 2015.
This performance was driven by the adjustments related to the phase-in progression as of 1 January 2016. Additionally, the kwanza and metical depreciation and the decrease recorded by the shortfall of impairment to expected loss also contributed to the unfavourable performance of the CET1 ratio, which was partially mitigated by the contribution of positive net income in the period and risk weighted assets reduction.
| SOLVENCY RATIOS (CRD IV/CRR) (*) | Euro million | |
|---|---|---|
| 31 Mar. 16 | 31 Dec. 15 | |
| PHASED-IN | ||
| Own funds | ||
| Common equity tier 1 (CET1) | 5,435 | 5,775 |
| Tier 1 | 5,435 | 5,775 |
| Total Capital | 5,887 | 6,207 |
| Risk weighted assets | 42,503 | 43,315 |
| Solvency ratios | ||
| CET1 | 12.8% | 13.3% |
| Tier 1 | 12.8% | 13.3% |
| Total capital | 13.9% | 14.3% |
| FULLY IMPLEMENTED | ||
| CET1 ratio | 10.0% | 10.2% |
| (*) Considers the new DTA regime for capital purposes (according t | o IAS) and includes the cumulative net |
income recorded in each period. M arch 2016 CET1 ratio excluding the cumulative net income o f the first quarter of 2016 stood at 12,7%.
Continued implementation of Millennium bcp's Strategic Plan, materializing the trends of recurrent profitability recovery, efficiency improvement and cost of risk reduction, being the first quarter also marked by initiatives of close proximity to customers.
Highlights during this period include:
The International Monetary Fund (IMF) estimates that the world economy will continue to record modest growth levels in 2016 (3.2%) due to the persistence of the slowdown in emerging countries, the moderation of activity in the developed economies and the instability of financial markets. To these factors accrue risks of a non-economic nature, namely those related to the existence of several spots of geopolitical tensions, which could affect negatively the performance of the world economy.
The unfavorable external environment and the deflationary pressures resulting from the downward trajectory of oil prices, which was particularly steep in January and February, led to the strengthening of the expansionary stance of the European Central Bank's (ECB) monetary policy in March. The announced measures contemplated an extension of the securities purchase program, both in terms of scope and amount, the reduction of the main refinancing rate from 0.05% to 0.0%, and of the deposit facility rate from -0.30% to - 0.40%, as well as the introduction of refinancing operations to the banking sector with a four-year maturity and an interest rate equal to or below zero. In the US, the steady improvement of the labor market has failed to push the growth pace of economic activity towards the potential, in a context of heightened uncertainty regarding the course of the global economy and financial markets. This set of circumstances led the Federal Reserve to adopt, in its March meeting, a more cautious stance regarding the normalization of its monetary policy.
During the first months of the year there was an increase in the degree of risk aversion in financial markets, which has translated into a depreciation of equity indexes, a fall in the yields of the government bonds of Germany and the US and an appreciation of the currencies of the main developed economies against the emerging currencies, with the exception of Pound Sterling, which was penalized by fears surrounding the referendum about the United Kingdom's permanence in the European Union that will take place on June 23rd. Concerning the interbank monetary market, the announcement of additional measures of monetary stimulus by the ECB contributed to a steepening of the downward trend of the euribor interest rates, which remained at negative levels for the maturities up to twelve months.
According to Statistics Portugal, Portuguese GDP grew 1.3% in annual terms in the last quarter of 2015, which corresponds to a slight deceleration vis-à-vis the previous three months. The lesser vigor of economic activity stemmed essentially from the negative contribution of the net external demand due to the strong acceleration of imports, to which accrued the effect of the moderation of the investment growth. As per the European Commission latest forecasts, the recovery process of the Portuguese economy should remain in place in 2016, with GDP projected to grow by 1.6% (above the 1.5% recorded in the previous year), supported by the domestic demand, which is bound to benefit from diminished interest rate levels, low energy costs, and the gradual improvement of the labor market. The uncertainty surrounding the process of the State budget's approval at the start of the year, combined with the greater instability of international financial markets unleashed a devaluation of the local equity indexes as well as a rise in government bonds yields, which led to a widening of the risk premium of the Portuguese Republic against that of the other Euro Area countries, a movement that was partially reverted towards the end of the first quarter.
Poland has displayed a strong economic performance, mainly based on the robustness of the private consumption, which continues to benefit from the steady improvement of the labor market, and more recently from a set of fiscal stimulus measures especially aimed at families. For 2016, the IMF forecasts a GDP growth rate of 3.6%, a value that coincides with the one observed in 2015. In the first quarter of the current year, the Zloty evolved in a volatile but trendless fashion, which combined with the persistence of the inflation rate at negative levels should allow the National Bank of Poland to maintain the expansionary stance of its monetary policy. The economic activity in Mozambique is expected to slow down slightly (from 6.3% in 2015 to 6.0% in 2016, according to the IMF) due to the likely moderation of public and private investment as well as the lower dynamism of private consumption, in a context of decelerating real disposable income caused by the rise of inflation. The substantial depreciation of the Metical in the recent past should maintain monetary policy restrictive for the remainder of this year. For Angola, the IMF predicts that the GDP expansion pace in 2016 will fall from 3.0% to 2.5%, reflecting the reduction of the purchasing capacity of the state, the firms and the households, due the low level of oil prices. The greater scarcity of hard currencies in the domestic financial system should maintain the monetary policy tied to the sustainability of the Kwanza.
| Consolidated | Activity in Portugal | International activity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Mar 16 | Mar 15 | Change | Mar 16 | Mar 15 | Change | Mar 16 | Mar 15 | Change | |
| Income statement | |||||||||
| Net interest income | 292.4 | 297.8 | $-1.8%$ | 171.5 | 175.4 | $-2.2%$ | 120.8 | 122.4 | $-1.3%$ |
| Dividends from equity instruments | 2.0 | 2.0 | 4.8% | 2.0 | 2.0 | 4.8% | × | $\overline{\phantom{a}}$ | |
| Net fees and commission income | 163.9 | 162.3 | 1.0% | 118.2 | 105.8 | 11.8% | 45.7 | 56.5 | $-19.1%$ |
| Other operating income | (12.4) | (17.2) | (1.8) | (14.1) | (10.6) | (3.1) | |||
| Net trading income | 28.3 | 191.3 | $-85.2%$ | 4.7 | 163.8 | $-97.1%$ | 23.6 | 27.5 | $-14.1%$ |
| Equity accounted earnings | 13.9 | 6.1 | 129.0% | 13.9 | 6.4 | 116.8% | × | (0.3) | |
| Net operating revenues | 488.1 | 642.2 | $-24.0%$ | 308.6 | 439.2 | $-29.7%$ | 179.6 | 203.0 | $-11.6%$ |
| Staff costs | 138.4 | 143.4 | $-3.5%$ | 91.5 | 92.8 | $-1.4%$ | 46.9 | 50.7 | $-7.4%$ |
| Other administrative costs | 91.8 | 97.1 | $-5.4%$ | 56.3 | 57.7 | $-2.4%$ | 35.5 | 39.4 | $-9.8%$ |
| Depreciation | 12.8 | 13.8 | $-7.1%$ | 7.1 | 7.7 | $-8.4%$ | 5.8 | 6.1 | $-5.5%$ |
| Operating costs | 243.1 | 254.3 | $-4.4%$ | 154.9 | 158.2 | $-2.1%$ | 88.2 | 96.2 | $-8.3%$ |
| Operating profit before impairment and provisions | 245.1 | 387.9 | $-36.8%$ | 153.7 | 281.0 | $-45.3%$ | 91.4 | 106.9 | $-14.5%$ |
| Loans impairment (net of recoveries) | 160.7 | 201.0 | $-20.1%$ | 142.0 | 179.4 | $-20.9%$ | 18.7 | 21.7 | $-13.8%$ |
| Other impairment and provisions | 15.4 | 70.1 | $-78.1%$ | 15.9 | 70.3 | $-77.3%$ | (0.6) | (0.1) | |
| Profit before income tax | 69.1 | 116.7 | $-40.8%$ | (4.2) | 31.4 | $\overline{a}$ | 73.2 | 85.3 | $-14.2%$ |
| Income tax | 15.0 | 32.8 | $-54.3%$ | (5.7) | 16.8 | ä, | 20.7 | 16.0 | 28.8% |
| Income after income tax from continuing operations | 54.1 | 83.9 | $-35.6%$ | 1.5 | 14.6 | $-89.9%$ | 52.6 | 69.3 | $-24.1%$ |
| Income arising from discontinued operations | 29.0 | 16.7 | 74.0% | ×, | × | 29.0 | 15.9 | 82.5% | |
| Non-controlling interests | 36.4 | 30.1 | 20.7% | (0.4) | (0.2) | × | 36.8 | 30.3 | 21.4% |
| Net income | 46.7 | 70.4 | $-33.7%$ | 1.9 | 14.8 | 44.8 | 54.9 | $-18.3%$ | |
| Balance sheet and activity indicators | |||||||||
| Total assets | 76,295 | 78,313 | $-2.6%$ | 55,681 | 56,727 | $-1.8%$ | 20,614 | 21,587 | $-4.5%$ |
| Total customer funds (1) | 63,818 | 64,837 | $-1.6%$ | 47,750 | 48,256 | $-1.0%$ | 16,068 | 16,581 | $-3.1%$ |
| Balance sheet customer funds (1) | 51,677 | 52,010 | $-0.6%$ | 36,950 | 36,985 | $-0.1%$ | 14,727 | 15,025 | $-2.0%$ |
| Deposits | 49,553 | 49,212 | 0.7% | 34,910 | 34,293 | 1.8% | 14,643 | 14,919 | $-1.9%$ |
| Debt securities | 2,124 | 2,798 | $-24.1%$ | 2,040 | 2,692 | $-24.2%$ | 84 | 106 | $-20.7%$ |
| Off-balance sheet customer funds (1) | 12,141 | 12,826 | $-5.3%$ | 10,799 | 11,271 | $-4.2%$ | 1,341 | 1,556 | $-13.8%$ |
| Assets under management | 3,778 | 3,961 | $-4.6%$ | 2,891 | 2,956 | $-2.2%$ | 887 | 1,005 | $-11.8%$ |
| Capitalisation products | 8,363 | 8,865 | $-5.7%$ | 7,908 | 8,315 | $-4.9%$ | 454 | 550 | $-17.5%$ |
| Discontinued operations | 1,461 | 3,137 | $-53.4%$ | $\sim$ | 1,590 | 1,461 | 1,547 | $-5.5%$ | |
| Loans to customers (gross) (1) | 53,787 | 57,006 | $-5.6%$ | 41,178 | 43,475 | $-5.3%$ | 12,609 | 13,531 | $-6.8%$ |
| Individuals (1) | 28,784 | 30,087 | $-4.3%$ | 20,680 | 21,459 | $-3.6%$ | 8,104 | 8,628 | $-6.1%$ |
| Mortgage | 24,807 | 26,024 | $-4.7%$ | 18,319 | 18,971 | $-3.4%$ | 6,488 | 7,053 | $-8.0%$ |
| Consumer and others | 3,977 | 4,062 | $-2.1%$ | 2,361 | 2,488 | $-5.1%$ | 1,616 | 1,575 | 2.6% |
| Companies (1) | 25,003 | 26,919 | $-7.1%$ | 20,497 | 22,016 | $-6.9%$ | 4,505 | 4,903 | $-8.1%$ |
| Services | 9,858 | 10,626 | $-7.2%$ | 8,960 | 9,640 | $-7.1%$ | 898 | 986 | $-9.0%$ |
| Commerce | 3,206 | 3,243 | $-1.2%$ | 2,187 | 2,141 | 2.2% | 1,018 | 1,102 | $-7.6%$ |
| Construction | 3,309 | 3,902 | $-15.2%$ | 2,976 | 3,368 | $-11.7%$ | 333 | 534 | $-37.6%$ |
| Other | 8,631 | 9,149 | $-5.7%$ | 6,375 | 6,868 | $-7.2%$ | 2,256 | 2,281 | $-1.1%$ |
| Discontinued operations | 847 | 1,097 | $-22.8%$ | 847 | 1,097 | $-22.8%$ | |||
| Credit quality | |||||||||
| Total overdue loans (1) | 4,204 | 4,417 | $-4.8%$ | 3,898 | 4,118 | $-5.3%$ | 306 | 299 | 2.3% |
| Overdue loans by more than 90 days (1) | 3,958 | 4,158 | $-4.8%$ | 3,695 | 3,893 | $-5.1%$ | 263 | 265 | $-0.8%$ |
| Overdue loans by more than 90 days /Total loans (1) | 7.4% | 7.3% | 9.0% | 9.0% | 2.1% | 2.0% | |||
| Total impairment (balance sheet) (1) | 3,406 | 3,550 | $-4.1%$ | 2,999 | 3,116 | $-3.8%$ | 407 | 434 | $-6.2%$ |
| Total impairment (balance sheet) /Total loans (1) | 6.3% | 6.2% | 7.3% | 7.2% | 3.2% | 3.2% | |||
| Total impairment (balance sheet) / Overdue loans by more than 90 days (1) | 86.0% | 85.4% | 81.2% | 80.0% | 154.7% | 163.5% | |||
| Cost of risk (net of recoveries, in b.p.) (1) | 119 | 141 | 138 | 165 | 59 | 64 | |||
| Restructured loans / Total loans (2) | 9.9% | 10.7% | |||||||
| Restructured loans not included in the credit at risk / Total loans (2) | 5.7% | 6.7% | |||||||
| 49.4% | 39.6% | 49.6% | 36.0% | 49.1% | 47.4% |
Consolidated Income Statement for the three months period ended 31 March, 2016 and 2015
| 31 March 2016 |
31 March 2015 |
|
|---|---|---|
| (Thousands of Euros) | ||
| Interest and similar income Interest expense and similar charges |
486,669 (194,310) |
567,464 (269,645) |
| Net interest income | 292,359 | 297,819 |
| Dividends from equity instruments Net fees and commission income Net gains / losses arising from trading and hedging activities Net gains / losses arising from available for sale financial assets Other operating income |
2,044 163,949 15,577 12,755 (11,616) 475,068 |
1,951 162,285 14,833 176,449 (16,483) 636,854 |
| Other net income from non banking activity | 4,247 | 4,249 |
| Total operating income | 479,315 | 641,103 |
| Staff costs Other administrative costs Depreciation |
138,444 91,817 12,815 |
143,444 97,085 13,797 |
| Operating costs | 243,076 | 254,326 |
| Operating net income before provisions and impairments | 236,239 | 386,777 |
| Loans impairment Other financial assets impairment Other assets impairment Other provisions |
(160,657) (16,241) (5,442) 6,330 |
(201,047) (18,955) (41,242) (9,940) |
| Operating net income | 60,229 | 115,593 |
| Share of profit of associates under the equity method Gains / (losses) from the sale of subsidiaries and other assets |
13,874 (5,046) |
6,058 (4,945) |
| Net (loss) / income before income tax Income tax |
69,057 | 116,706 |
| Current | (24,554) | (29,582) |
| Deferred Net (loss) / income after income tax from continuing operations |
9,556 54,059 |
(3,234) 83,890 |
| Income arising from discontinued operations | 29,005 | 16,673 |
| Net income after income tax | 83,064 | 100,563 |
| Attributable to: Shareholders of the Bank Non-controlling interests |
46,678 36,386 |
70,413 30,150 |
| Net income for the period | 83,064 - |
100,563 - |
| Earnings per share (in euros) Basic Diluted |
0.003 0.003 |
0.005 0.005 |
Consolidated Balance Sheet as at 31 March, 2016 and 2015 and 31 December, 2015
| 31 March 2016 |
31 December 2015 |
31 March 2015 |
|
|---|---|---|---|
| (Thousands of Euros) | |||
| Assets | |||
| Cash and deposits at central banks | 2,210,409 | 1,840,317 | 2,382,977 |
| Loans and advances to credit institutions | |||
| Repayable on demand | 739,793 | 776,413 | 1,127,109 |
| Other loans and advances | 1,300,496 | 921,648 | 1,303,406 |
| Loans and advances to customers | 51,182,998 | 51,970,159 | 54,495,144 |
| Financial assets held for trading | 2,009,383 | 1,188,805 | 2,069,458 |
| Other financial assets held for trading | |||
| at fair value through profit or loss | 150,833 | 152,018 | - |
| Financial assets available for sale | 11,459,614 | 10,779,030 | 10,088,065 |
| Assets with repurchase agreement | 50,766 | - | 19,852 |
| Hedging derivatives | 128,735 | 73,127 | 70,952 |
| Financial assets held to maturity | 474,038 | 494,891 | 438,926 |
| Investments in associated companies | 331,502 | 315,729 | 318,288 |
| Non current assets held for sale | 1,783,612 | 1,765,382 | 1,668,673 |
| Investment property | 141,917 | 146,280 | 169,857 |
| Property and equipment | 626,881 | 670,871 | 775,484 |
| Goodwill and intangible assets | 207,842 | 210,916 | 208,538 |
| Current tax assets | 43,331 | 43,559 | 40,887 |
| Deferred tax assets | 2,571,446 | 2,561,506 | 2,326,584 |
| Other assets | 881,667 | 974,228 | 809,283 |
| 76,295,263 | 74,884,879 | 78,313,483 | |
| Liabilities | |||
| Amounts owed to credit institutions | 10,813,908 | 8,591,045 | 11,065,979 |
| Amounts owed to customers | 51,014,422 | 51,538,583 | 50,758,785 |
| Debt securities | 4,463,177 | 4,768,269 | 5,575,751 |
| Financial liabilities held for trading | 847,637 | 723,228 | 1,024,841 |
| Hedging derivatives | 470,510 | 541,230 | 745,562 |
| Provisions for liabilities and charges | 273,188 | 284,810 | 314,301 |
| Subordinated debt | 1,671,380 | 1,645,371 | 2,047,955 |
| Current income tax liabilities | 20,337 | 22,287 | 24,884 |
| Deferred income tax liabilities | 16,039 | 14,810 | 9,679 |
| Other liabilities | 1,052,392 | 1,074,675 | 1,178,011 |
| Total Liabilities | 70,642,990 | 69,204,308 | 72,745,748 |
| Equity | |||
| Share capital | 4,094,235 | 4,094,235 | 3,706,690 |
| Treasury stock | (867) | (1,187) | (13,909) |
| Share premium | 16,471 | 16,471 | - |
| Preference shares | 59,910 | 59,910 | 171,175 |
| Other capital instruments | 2,922 | 2,922 | 9,853 |
| Fair value reserves | 15,541 | 23,250 | 276,588 |
| Reserves and retained earnings | 363,976 | 192,224 | 302,228 |
| Net income for the period attributable to Shareholders | 46,678 | 235,344 | 70,413 |
| Total Equity attributable to Shareholders of the Bank | 4,598,866 | 4,623,169 | 4,523,038 |
| Non-controlling interests | 1,053,407 | 1,057,402 | 1,044,697 |
| Total Equity | 5,652,273 | 5,680,571 | 5,567,735 |
| 76,295,263 | 74,884,879 | 78,313,483 |
Capitalisation products – includes unit linked saving products and retirement saving plans ("PPR", "PPE" and "PPR/E").
Commercial gap – total loans to customers net of BS impairments accumulated minus on-balance sheet customer funds.
Cost of risk, gross (expressed in bp) - ratio of impairment charges accounted in the period to customer loans (gross).
Cost of risk, net (expressed in bp) - ratio of impairment charges (net of recoveries) accounted to customer loans (gross).
Cost to income – operating costs divided by net operating revenues.
Cost to core income - operating costs divided by the net interest income and net fees and commission income.
Core income - net interest income plus net fees and commission income.
Core net income - corresponding to net interest income plus net commissions deducted from operating costs.
Coverage of credit at risk by balance sheet impairments – total BS impairments accumulated for risks of credit divided by credit at risk (gross).
Coverage of credit at risk by balance sheet impairments and real/financial guarantees – total BS impairments accumulated for risks of credit plus real and financial guarantees divided by credit at risk (gross).
Coverage of non-performing loans by balance sheet impairments – total BS impairments accumulated for risks of credit divided by NPL.
Credit at risk – definition broader than the non performing loans which includes also restructured loans whose changes from initial terms have resulted in the bank being in a higher risk position than previously; restructured loans which have resulted in the bank becoming in a lower risk position (e.g. reinforced collateral) are not included in credit at risk.
Credit at risk (net) – credit at risk deducted from BS impairments accumulated for risks of credit.
Customer spread – Difference between the spread on the loans to customers book over 3 months Euribor and the spread on the customers' deposits portfolio over 3 months Euribor.
Debt securities - debt securities issued by the Bank and placed with customers.
Dividends from equity instruments - dividends received from investments in financial assets held for trading and 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.
Loan book spread - average spread on the loan portfolio over 3 months Euribor.
Loan to value ratio (LTV) – Mortgage amount divided by the appraised value of property.
Loan to Deposits ratio (LTD) – Total loans to customers net of accumulated BS impairments for risks of credit to total customer deposits.
Net interest margin - net interest income for the period 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.
Non-performing loans – Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining principal.
Non-performing loans ratio (net) – Loans more than 90 days overdue and doubtful loans reclassified as overdue for provisioning purposes less BS impairments accumulated for credit risk divided by total loans (gross).
Non-performing loans coverage ratio – total BS impairments accumulated for credit risk divided by overdue and doubtful loans divided.
Loans more than 90 days overdue coverage - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with installments of capital and interest overdue more than 90 days.
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 loans - loans in arrears, not including the non-overdue remaining principal.
Overdue loans coverage ratio – total BS impairments accumulated for risks of credit divided by total amount of loans overdue with installments of capital and interest overdue.
Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes.
Return on equity (ROE) – Net income (including the minority interests) divided by the average attributable equity, deducted from preference shares and other capital instruments.
Return on average assets (ROA) – Net income (including minority interests) divided by the average total assets.
Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement, financial assets held to maturity and other financial assets held for trading at fair value through net income.
Spread on term deposits portfolio – average spread on terms deposits portfolio over 3 months Euribor.
Total customer funds - amounts due to customers (including debt securities), assets under management and capitalisation products.
Total operating income – net interest income, dividends from equity instruments, net fees and commissions income, trading income, equity accounted earnings and other operating income.
The financial information in this presentation has been prepared under the scope of the International Financial Reporting Standards ("IFRS") of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002.
The figures presented do not constitute any form of commitment by BCP in regard to future earnings.
2015 and 2016 figures were not audited yet.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.