Quarterly Report • May 27, 2016
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 4,094,235,361.88.
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
INVESTOR RELATIONS Rui Coimbra Phone +351 211 131 084 [email protected] [email protected]
MEDIA CONTACT Erik T. Burns Phone +351 211 131 242 Mobile +351 917 265 020 [email protected]
| PTBCPOAM00007 | |||||
|---|---|---|---|---|---|
| Financial Highlights Euro million |
|---|
| -------------------------------------- |
| 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 Net interest income |
46.7 292.4 |
70.4 297.8 |
-33.7% -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) | 4.1% | 6.9% | |
| Income before tax and non-controlling interests / Average equity (2) | 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) | |||
| 11.5% | 12.1% | ||
| Credit at risk, net / Total loans, net (2) | 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 | 10.0% | 8.7% | |
| Branches (3) | |||
| Portugal activity | 662 | 695 | -4.7% |
| Foreign activity | 667 | 674 | -1.0% |
| Employees (3) | |||
| 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 | 2,590 | 3,097 | ||
| Shareholders' equity and non-controlling 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% |
(1) Excludes the impact from discontinued operations (Banco Millennium in Angola).
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 to IAS) and includes the cumulative net income recorded in each period. M arch 2016 CET1 ratio excluding the cumulative net income of 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 | Cha | |
| Income statement | |||||||||
| Net interest income | 292.4 | 297.8 | $-1.8%$ | 171.5 | 175.4 | $-2.2%$ | 120.8 | 122.4 | |
| Dividends from equity instruments | 2.0 | 2.0 | 4.8% | 2.0 | 2.0 | 4.8% | |||
| Net fees and commission income | 163.9 | 162.3 | 1.0% | 118.2 | 105.8 | 11.8% | 45.7 | 56.5 | |
| Other operating income | (12.4) | (17.2) | × | (1.8) | (14.1) | $\overline{\phantom{a}}$ | (10.6) | (3.1) | |
| Net trading income | 28.3 | 191.3 | $-85.2%$ | 4.7 | 163.8 | $-97.1%$ | 23.6 | 27.5 | |
| 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 | -1 |
| Staff costs | 138.4 | 143.4 | $-3.5%$ | 91.5 | 92.8 | $-1.4%$ | 46.9 | 50.7 | |
| Other administrative costs | 91.8 | 97.1 | $-5.4%$ | 56.3 | 57.7 | $-2.4%$ | 35.5 | 39.4 | |
| Depreciation | 12.8 | 13.8 | $-7.1%$ | 7.1 | 7.7 | $-8.4%$ | 5.8 | 6.1 | |
| Operating costs | 243.1 | 254.3 | $-4.4%$ | 154.9 | 158.2 | $-2.1%$ | 88.2 | 96.2 | |
| Operating profit before impairment and provisions | 245.1 | 387.9 | $-36.8%$ | 153.7 | 281.0 | $-45.3%$ | 91.4 | 106.9 | $-1$ |
| Loans impairment (net of recoveries) | 160.7 | 201.0 | $-20.1%$ | 142.0 | 179.4 | $-20.9%$ | 18.7 | 21.7 | ż |
| 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 | $\ddot{\phantom{0}}$ | 73.2 | 85.3 | $-1$ |
| Income tax | 15.0 | 32.8 | $-54.3%$ | (5.7) | 16.8 | ÷, | 20.7 | 16.0 | |
| Income after income tax from continuing operations | 54.1 | 83.9 | $-35.6%$ | 1.5 | 14.6 | $-89.9%$ | 52.6 | 69.3 | $-2$ |
| Income arising from discontinued operations | 29.0 | 16.7 | 74.0% | ä, | ÷ | ÷, | 29.0 | 15.9 | |
| Non-controlling interests | 36.4 | 30.1 | 20.7% | (0.4) | (0.2) | ÷. | 36.8 | 30.3 | |
| Net income | 46.7 | 70.4 | $-33.7%$ | 1.9 | 14.8 | ÷, | 44.8 | 54.9 | $-1$ |
| Balance sheet and activity indicators | |||||||||
| Total assets | 76,295 | 78,313 | $-2.6%$ | 55,681 | 56,727 | $-1.8%$ | 20,614 | 21,587 | |
| Total customer funds (1) | 63,818 | 64,837 | $-1.6%$ | 47,750 | 48,256 | $-1.0%$ | 16,068 | 16,581 | |
| Balance sheet customer funds (1) | 51,677 | 52,010 | $-0.6%$ | 36,950 | 36,985 | $-0.1%$ | 14,727 | 15,025 | |
| Deposits | 49,553 | 49,212 | 0.7% | 34,910 | 34,293 | 1.8% | 14,643 | 14,919 | |
| Debt securities | 2,124 | 2,798 | $-24.1%$ | 2,040 | 2,692 | $-24.2%$ | 84 | 106 | |
| Off-balance sheet customer funds (1) | 12,141 | 12,826 | $-5.3%$ | 10,799 | 11,271 | $-4.2%$ | 1,341 | 1,556 | $-1$ |
| Assets under management | 3,778 | 3,961 | $-4.6%$ | 2,891 | 2,956 | $-2.2%$ | 887 | 1,005 | d |
| Capitalisation products | 8,363 | 8,865 | $-5.7%$ | 7,908 | 8,315 | $-4.9%$ | 454 | 550 | à, |
| Discontinued operations | 1,461 | 3,137 | $-53.4%$ | 1,590 | 1,461 | 1,547 | |||
| Loans to customers (gross) (1) | 53,787 | 57,006 | $-5.6%$ | 41,178 | 43,475 | $-5.3%$ | 12,609 | 13,531 | |
| Individuals (1) | 28,784 | 30,087 | $-4.3%$ | 20,680 | 21,459 | $-3.6%$ | 8,104 | 8,628 | |
| Mortgage | 24,807 | 26,024 | $-4.7%$ | 18,319 | 18,971 | $-3.4%$ | 6,488 | 7,053 | |
| Consumer and others | 3,977 | 4,062 | $-2.1%$ | 2,361 | 2,488 | $-5.1%$ | 1,616 | 1,575 | |
| Companies (1) | 25,003 | 26,919 | $-7.1%$ | 20,497 | 22,016 | $-6.9%$ | 4,505 | 4,903 | |
| Services | 9,858 | 10,626 | $-7.2%$ | 8,960 | 9,640 | $-7.1%$ | 898 | 986 | |
| Commerce | 3,206 | 3,243 | $-1.2%$ | 2,187 | 2,141 | 2.2% | 1,018 | 1,102 | |
| 3,309 | 3,902 | $-15.2%$ | 2,976 | 3,368 | $-11.7%$ | 333 | 534 | ||
| Construction Other |
8,631 | 9,149 | $-5.7%$ | 6,375 | 6,868 | $-7.2%$ | 2,256 | 2,281 | |
| Discontinued operations | 847 | 1,097 | $-22.8%$ | × | ٠ | ÷ | 847 | 1,097 | -2 |
| Credit quality | |||||||||
| 4,204 | 4,417 | $-4.8%$ | 4,118 | $-5.3%$ | 306 | 299 | |||
| Total overdue loans (1) | 3,898 | ||||||||
| Overdue loans by more than 90 days (1) | 3,958 | 4,158 | $-4.8%$ | 3,695 | 3,893 | $-5.1%$ | 263 | 265 | |
| 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 | |
| Total impairment (balance sheet) /Total loans (1) | 6.3% 86.0% |
6.2% 85.4% |
7.3% 81.2% |
7.2% 80.0% |
3.2% 154.7% |
3.2% 163.5% |
|||
| Total impairment (balance sheet) / Overdue loans by more than 90 days (1) | 119 | 141 | 138 | 165 | 59 | 64 | |||
| Cost of risk (net of recoveries, in b.p.) (1) | 9.9% | 10.7% | |||||||
| Restructured loans / Total loans (2) | |||||||||
| Restructured loans not included in the credit at risk / Total loans $(2)$ | 5.7% | 6.7% |
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: 01/01/2016 End: 31/03/2016 | ||||||
| Individual | Consolidated | |||||||
| Balance Sheet Items | n (NCA) | n-1 (NCA) | Var. (% ) | n (IAS) | n-1 (IAS) | Var. (% ) | ||
| ASSETS (NET) | ||||||||
| Loans to other credit institutions (2) | 1,426,177,455 | 1,306,046,137 | 9.20% | 2,040,289,009 | 2,430,514,230 | -16.06% | ||
| Loans to clients | 35,988,274,006 | 36,452,956,701 | -1.27% | 51,182,998,275 | 54,495,144,193 | -6.08% | ||
| Fixed income securities | 6,446,296,960 | 6,236,431,239 | 3.37% | 11,587,243,090 | 9,872,883,618 | 17.36% | ||
| Variable yield securities | 3,132,425,817 | 3,195,703,701 | -1.98% | 2,557,390,014 | 2,743,417,886 | -6.78% | ||
| Investments | 3,660,903,060 | 3,779,047,478 | -3.13% | 331,502,469 | 318,288,470 | 4.15% | ||
| SHAREHOLDER'S AND EQUIVALENT EQUITY | ||||||||
| Equity Capital | 4,094,235,362 | 3,706,690,253 | 10.46% | 4,094,235,362 | 3,706,690,253 | 10.46% | ||
| Nº of ordinary shares | 59,039,023,275 | 54,194,709,415 | - | 59,039,023,275 | 54,194,709,415 | - | ||
| Nº of other shares | 0 | 0 | - | - | ||||
| Value of own shares | 0 | 0 | - | 866,809 | 2,323,631 | -62.70% | ||
| Nº of voting shares | 0 | 0 | - | 24,280,365 | 24,280,365 | - | ||
| Nº of preferred, non voting shares | 0 | 0 | - | - | ||||
| Subordinate loans | 1,551,160,147 | 2,037,844,135 | -23.88% | 1,671,379,769 | 2,047,954,550 | -18.39% | ||
| Minority interests | 0 | 0 | - | 1,053,406,613 | 1,044,697,390 | 0.83% | ||
| LIABILITIES | ||||||||
| Amounts owed to credit institutions | 10,062,186,305 | 10,989,964,492 | -8.44% | 10,813,908,111 | 11,065,979,698 | -2.28% | ||
| Amounts owed to clients | 35,193,425,513 | 34,514,345,325 | 1.97% | 51,014,422,429 | 50,758,785,300 | 0.50% | ||
| Debt securities | 3,670,113,390 | 4,507,790,484 | -18.58% | 4,463,176,578 | 5,575,751,244 | -19.95% | ||
| TOTAL ASSETS (NET) | 56,707,292,853 | 57,261,821,891 | -0.97% | 76,295,263,487 | 78,313,483,561 | -2.58% | ||
| TOTAL SHAREHOLDER'S EQUITY | 4,559,445,624 | 3,152,064,499 | 44.65% | 4,598,866,896 | 4,523,038,423 | 1.68% | ||
| TOTAL LIABILITIES | 52,147,847,229 | 54,109,757,392 | -3.63% | 70,642,989,978 | 72,745,747,748 | -2.89% |
| Individual | Consolidated | ||||||
|---|---|---|---|---|---|---|---|
| P & L Items | n | n-1 | Var. (% ) | n | n-1 | Var. (% ) | |
| Financial margin (3) | 170,934,848 | 161,961,560 | 5.54% | 292,359,487 | 297,819,855 | -1.83% | |
| Commissions and other oper. revenue (net) | 120,472,692 | 195,072,410 | -38.24% | 180,538,673 | 161,779,616 | 11.60% | |
| Securities yield and profits from financial transactions (net) 4,197,175 | 80,851,395 | -94.81% | 14,135,362 | 174,278,005 | -91.89% | ||
| Banking Income | 295,604,715 | 437,885,365 | -32.49% | 487,033,522 | 633,877,476 | -23.17% | |
| Personnel, administ. and other costs | -151,227,405 | -153,464,537 | -1.46% | -230,261,126 | -240,529,193 | -4.27% | |
| Amortizations | -5,784,543 | -5,902,718 | -2.00% | -12,814,978 | -13,797,377 | -7.12% | |
| Provisions (net of adjustments) | -137,043,354 | -161,527,501 | -15.16% | -159,768,739 | -252,229,291 | -36.66% | |
| Extraordinary profit | 0 | 0 | n.a. | 0 | 0 | n.a. | |
| Profit before taxes | 1,549,413 | 116,990,609 | -98.68% | 84,188,679 | 127,321,615 | -33.88% | |
| Income tax (4) | 1,769,629 | -17,449,299 | -110.14% | -14,998,323 | -32,816,328 | -54.30% | |
| Minority interests and income excluded from consolidation | 0 | 0 | - | -22,512,487 | -24,092,171 | -6.56% | |
| Net profit / loss for the quarter | 3,319,042 | 99,541,310 | -96.67% | 46,677,869 | 70,413,116 | -33.71% | |
| Net profit / loss per share for the quarter | 0.0001 | 0.0018 | -96.94% | 0.0008 | 0.0013 | -39.15% | |
| Self financing (5) | 146,146,939 | 266,971,529 | -45.26% | 219,261,586 | 336,439,784 | -34.83% |
(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 three months period ended 31 March, 2016 and 2015
| 31 March 2016 |
31 March 2015 |
|
|---|---|---|
| (Thousands of Euros) | ||
| Interest and similar income | 486,669 | 567,464 |
| Interest expense and similar charges | (194,310) | (269,645) |
| Net interest income | 292,359 | 297,819 |
| Dividends from equity instruments | 2,044 | 1,951 |
| Net fees and commission income | 163,949 | 162,285 |
| Net gains / losses arising from trading and hedging activities Net gains / losses arising from available for |
15,577 | 14,833 |
| sale financial assets | 12,755 | 176,449 |
| Other operating income | (11,616) | (16,483) |
| 475,068 | 636,854 | |
| Other net income from non banking activity | 4,247 | 4,249 |
| Total operating income | 479,315 | 641,103 |
| Staff costs | 138,444 | 143,444 |
| Other administrative costs | 91,817 | 97,085 |
| Depreciation | 12,815 | 13,797 |
| Operating costs | 243,076 | 254,326 |
| Operating net income before provisions and impairments | 236,239 | 386,777 |
| Loans impairment | (160,657) | (201,047) |
| Other financial assets impairment | (16,241) | (18,955) |
| Other assets impairment | (5,442) | (41,242) |
| Other provisions | 6,330 | (9,940) |
| Operating net income | 60,229 | 115,593 |
| Share of profit of associates under the equity method | 13,874 | 6,058 |
| Gains / (losses) from the sale of subsidiaries and other assets | (5,046) | (4,945) |
| Net (loss) / income before income tax Income tax |
69,0 57 |
116,706 |
| Current | (24,554) | (29,582) |
| Deferred | 9,556 | (3,234) |
| Net (loss) / income after income tax from continuing operations | 54,059 | 83,890 |
| Income arising from discontinued operations | 29,00 5 |
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 | 0.003 | 0.005 |
| Diluted | 0.003 | 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 Fair value reserves |
2,922 15,541 |
2,922 23,250 |
9,853 276,588 |
| 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.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| Notes | 31 March 2016 | 31 March 2015 | |
|---|---|---|---|
| (Thousands of Euros) | |||
| Interest and similar income | 3 | 486,669 | 567,464 |
| Interest expense and similar charges | 3 | (194,310) | (269,645) |
| Net interest income | 292,359 | 297,819 | |
| Dividends from equity instruments | 4 | 2,044 | 1,951 |
| Net fees and commissions income | 5 | 163,949 | 162,285 |
| Net gains / (losses) arising from trading and | |||
| hedging activities | 6 | 15,577 | 14,833 |
| Net gains / (losses) arising from financial | |||
| assets available for sale | 7 | 12,755 | 176,449 |
| Other operating income / (costs) | 8 | (11,616) | (16,483) |
| 475,068 | 636,854 | ||
| Other net income from non banking activities | 4,247 | 4,249 | |
| Total operating income | 479,315 | 641,103 | |
| Staff costs | 9 | 138,444 | 143,444 |
| Other administrative costs | 10 | 91,817 | 97,085 |
| Depreciation | 11 | 12,815 | 13,797 |
| Total operating expenses | 243,076 | 254,326 | |
| Operating net income before provisions and impairments | 236,239 | 386,777 | |
| Loans impairment | 12 | (160,657) | (201,047) |
| Other financial assets impairment | 13 | (16,241) | (18,955) |
| Other assets impairment | 27 and 32 | (5,442) | (41,242) |
| Other provisions | 14 | 6,330 | (9,940) |
| Operating net income / (loss) | 60,229 | 115,593 | |
| Share of profit of associates under the equity method | 15 | 13,874 | 6,058 |
| Gains / (losses) arising from the sale of subsidiaries and | |||
| other assets | 16 | (5,046) | (4,945) |
| Net income / (loss) before income taxes | 69,057 | 116,706 | |
| Income taxes | |||
| Current | 31 | (24,554) | (29,582) |
| Deferred | 31 | 9,556 | (3,234) |
| Income / (loss) after income taxes from continuing operations | 54,059 | 83,890 | |
| Income / (loss) arising from discontinued operations | 17 | 29,005 | 16,673 |
| Net income / (loss) after income taxes | 83,064 | 100,563 | |
| Consolidated net income / (loss) for the period attributable to: | |||
| Shareholders of the Bank | 46,678 | 70,413 | |
| Non-controlling interests | 44 | 36,386 | 30,150 |
| Net income / (loss) for the period | 83,064 | 100,563 | |
| Earnings per share (in Euros) | 18 | ||
| Basic Diluted |
0.003 0.003 |
0.005 0.005 |
|
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
| (Thousands of Euros) Assets Cash and deposits at Central Banks 19 2,210,409 Loans and advances to credit institutions Repayable on demand 20 739,793 Other loans and advances 21 1,300,496 Loans and advances to customers 22 51,182,998 51,970,159 Financial assets held for trading 23 2,009,383 1,188,805 Other financial assets held for trading at fair value through profit or loss 23 150,833 152,018 Financial assets available for sale 23 11,459,614 10,779,030 Assets with repurchase agreement 50,766 Hedging derivatives 24 128,735 73,127 Financial assets held to maturity 25 474,038 494,891 Investments in associated companies 26 331,502 315,729 Non-current assets held for sale 27 1,783,612 1,765,382 Investment property 28 141,917 146,280 Property and equipment 29 626,881 670,871 Goodwill and intangible assets 30 207,842 210,916 Current income tax assets 43,331 43,559 Deferred income tax assets 31 2,571,446 2,561,506 |
Notes | 31 March 2016 | 31 December 2015 |
|---|---|---|---|
| 1,840,317 | |||
| 776,413 | |||
| 921,648 | |||
| - | |||
| Other assets 32 881,667 |
974,228 | ||
| Total Assets 76,295,263 |
74,884,879 | ||
| Liabilities | |||
| Deposits from credit institutions 33 10,813,908 |
8,591,045 | ||
| Deposits from customers 34 51,014,422 |
51,538,583 | ||
| Debt securities issued 35 4,463,177 |
4,768,269 | ||
| Financial liabilities held for trading 36 847,637 |
723,228 | ||
| Hedging derivatives 24 470,510 |
541,230 | ||
| Provisions 37 273,188 |
284,810 | ||
| Subordinated debt 38 1,671,380 |
1,645,371 | ||
| Current income tax liabilities 20,337 |
22,287 | ||
| Deferred income tax liabilities 31 16,039 |
14,810 | ||
| Other liabilities 39 1,052,392 |
1,074,675 | ||
| Total Liabilities 70,642,990 |
69,204,308 | ||
| Equity | |||
| Share capital 40 4,094,235 |
4,094,235 | ||
| Share premium 16,471 |
16,471 | ||
| Preference shares 40 59,910 |
59,910 | ||
| Other equity instruments 40 2,922 |
2,922 | ||
| Treasury stock 43 (867) |
(1,187) | ||
| Fair value reserves 42 15,541 |
23,250 | ||
| Reserves and retained earnings 42 363,976 |
192,224 | ||
| Net income / (loss) for the period attributable to Shareholders 46,678 |
235,344 | ||
| Total Equity attributable to Shareholders of the Bank 4,598,866 |
4,623,169 | ||
| Non-controlling interests 44 1,053,407 |
1,057,402 | ||
| Total Equity 5,652,273 |
5,680,571 | ||
| 76,295,263 | 74,884,879 |
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the interim consolidated financial statements
| 31 March 2016 | 31 March 2015 | |
|---|---|---|
| (Thousands of Euros) | ||
| Cash flows arising from operating activities | ||
| Interests received | 442,209 | 525,732 |
| Commissions received | 197,524 | 182,938 |
| Fees received from services rendered | 16,246 | 17,939 |
| Interests paid | (160,644) | (286,852) |
| Commissions paid | (32,437) | (40,706) |
| Recoveries on loans previously written off | 8,222 | 15,787 |
| Net earned premiums | 8,507 | 7,595 |
| Claims incurred of insurance activity | (2,261) | (3,026) |
| Payments to suppliers and employees | (320,714) | (392,176) |
| Income taxes (paid) / received | (11,668) | (26,136) |
| 144,984 | 1,095 | |
| Decrease / (increase) in operating assets: | ||
| Receivables from / (Loans and advances to) credit institutions | (287,493) | 64,277 |
| Deposits held with purpose of monetary control | (573,729) | (620,139) |
| Loans and advances to customers | 648,352 | (634,047) |
| Short term trading account securities | (877,959) | (230,038) |
| Increase / (decrease) in operating liabilities: | ||
| Deposits from credit institutions repayable on demand | 200,529 | 68,022 |
| Deposits from credit institutions with agreed maturity date | 2,027,182 | 87,071 |
| Deposits from clients repayable on demand | (711,569) | 33,210 |
| Deposits from clients with agreed maturity date | 204,163 | 529,209 |
| 774,460 | (701,340) | |
| Cash flows arising from investing activities | ||
| Sale of shares in subsidiaries and associated companies | - | 301,855 |
| Dividends received | 2,044 | 1,951 |
| Interest income from available for sale financial assets and | ||
| held to maturity financial assets | 54,193 | 126,334 |
| Sale of available for sale financial assets | 1,698,235 | 4,337,508 |
| Acquisition of available for sale financial assets | (11,693,504) | (14,074,166) |
| Maturity of available for sale financial assets | 9,025,112 | 10,261,114 |
| Acquisition of tangible and intangible assets | (15,698) | (17,917) |
| Sale of tangible and intangible assets | 1,306 | 1,256 |
| Decrease / (increase) in other sundry assets | 261,747 | 477,003 |
| (666,565) | 1,414,938 | |
| Cash flows arising from financing activities | ||
| Issuance of subordinated debt | 967 | 520 |
| Reimbursement of subordinated debt | (21) | - |
| Issuance of debt securities | 47,658 | 125,014 |
| Reimbursement of debt securities | (382,483) | (369,683) |
| Issuance of commercial paper and other securities | 15,212 | 78,309 |
| Reimbursement of commercial paper and other securities | (8,142) | (558) |
| Dividends paid to non-controlling interests | (555) | (11,115) |
| Increase / (decrease) in other sundry liabilities and non-controlling interests | 183,327 | (321,401) |
| (144,037) | (498,914) | |
| Exchange differences effect on cash and equivalents | (112,222) | 84,320 |
| Net changes in cash and equivalents | (148,364) | 299,004 |
| Cash and equivalents at the beginning of the period | 1,401,724 | 1,398,584 |
| Cash (note 20) | 513,567 | 570,479 |
| Other short term investments (note 21) | 739,793 | 1,127,109 |
| Cash and equivalents at the end of the period | 1,253,360 | 1,697,588 |
Consolidated Statement of Changes in Equity for the three months period ended 31 March, 2016 and 2015
(Amounts expressed in thousands of Euros)
| Other | Equity | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| comprehensive income | Other | attributed | Non | |||||||||
| Other | Legal and Fair value and | reserves and | to the | -controlling | ||||||||
| Share | Preference | equity | Share | statutory | cash flow | retained | Treasury Shareholders | interests | Total | |||
| capital | shares | instruments premium reserves hedged reserves | Other | earnings | stock | of the Bank | (note 44) | equity | ||||
| Balance as at 31 December, 2014 | 3,706,690 | 171,175 | 9,853 | - | 223,270 | 106,898 | (2,383,487) | 2,391,684 | (13,547) | 4,212,536 | 774,371 | 4,986,907 |
| Other comprehensive income | ||||||||||||
| Exchange differences arising on consolidation | - | - | - | - | - | - | 40,913 | - | - | 40,913 | 38,846 | 79,759 |
| Fair value reserves (note 42) | - | - | - | - | - | 162,199 | - | - | - | 162,199 | (7,987) | 154,212 |
| Deferred tax of actuarial losses | ||||||||||||
| Taxes | - | - | - | - | - | - | (5,782) | - | - | (5,782) | - | (5,782) |
| Disposal of 15.54% of Bank Millennium S.A. | - | - | - | - | - | 7,491 | 4,561 | - | - | 12,052 | (7,491) | 4,561 |
| Net (loss) / income for the period | ||||||||||||
| Continuing operations | - | - | - | - | - | - | - | 61,673 | - | 61,673 | 22,217 | 83,890 |
| Discontinued operations | - | - | - | - | - | - | - | 8,740 | - | 8,740 | 7,933 | 16,673 |
| Total comprehensive income for the period | - | - | - | - | - | 169,690 | 39,692 | 70,413 | - | 279,795 | 53,518 | 333,313 |
| Dividends of BIM - Banco Internacional de | ||||||||||||
| Moçambique, S.A. and SIM - Seguradora | ||||||||||||
| Internacional de Moçambique, S.A.R.L. | - | - | - | - | - | - | - | - | - | - | (11,115) | (11,115) |
| Disposal of 15.54% of Bank Millennium S.A. Treasury stock (note 43) |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
31,089 - |
- (362) |
31,089 (362) |
227,910 - |
258,999 (362) |
| Other reserves arising on consolidation (note 42) | - | - | - | - | - | - | - | (20) | - | (20) | 13 | (7) |
| Balance as at 31 March, 2015 | 3,706,690 | 171,175 | 9,853 | - | 223,270 | 276,588 | (2,343,795) | 2,493,166 | (13,909) | 4,523,038 | 1,044,697 | 5,567,735 |
| Other comprehensive income | ||||||||||||
| Exchange differences arising on consolidation | - | - | - | - | - | - | (124,951) | - | - | (124,951) | (110,317) | (235,268) |
| Fair value reserves (note 42) | - | - | - | - | - | (253,338) | - | - | - | (253,338) | 27,034 | (226,304) |
| Actuarial losses | ||||||||||||
| Gross value | - | - | - | - | - | - | (110,507) | - | - | (110,507) | (185) | (110,692) |
| Taxes | - | - | - | - | - | - | 92,241 | - | - | 92,241 | (17) | 92,224 |
| Net income / (loss) for the period | ||||||||||||
| Continuing operations | - | - | - | - | - | - | - | 121,108 | - | 121,108 | 65,636 | 186,744 |
| Discontinued operations | - | - | - | - | - | - | - | 43,823 | - | 43,823 | 29,831 | 73,654 |
| Total comprehensive income for the period | - | - | - | - | - | (253,338) | (143,217) | 164,931 | - | (231,624) | 11,982 | (219,642) |
| Share capital increase | ||||||||||||
| by securities exchange (note 40) | 387,545 | (111,265) | (6,931) | 16,471 | - | - | - | - | - | 285,820 | - | 285,820 |
| Costs related to the share capital increase | - | - | - | - | - | - | - | (1,173) | - | (1,173) | - | (1,173) |
| Tax related to costs arising from the | ||||||||||||
| share capital increase | - | - | - | - | - | - | - | 247 | - | 247 | - | 247 |
| Dividends of BIM - Banco Internacional de | ||||||||||||
| Moçambique, S.A. and SIM - Seguradora | ||||||||||||
| Internacional de Moçambique, S.A.R.L. | - | - | - | - | - | - | - | - | - | - | 958 | 958 |
| Acquisition of 54.01% of the Units | ||||||||||||
| of the Investment Fund DP Invest | - | - | - | - | - | - | - | (101) | - | (101) | - | (101) |
| Treasury stock (note 43) | - | - | - | - | - | - | - | 34,468 | 12,722 | 47,190 | - | 47,190 |
| Other reserves arising on consolidation (note 42) | - | - | - | - | - | - | 3,434 | (3,662) | - | (228) | (235) | (463) |
| Balance as at 31 December, 2015 | 4,094,235 | 59,910 | 2,922 | 16,471 | 223,270 | 23,250 | (2,483,578) | 2,687,876 | (1,187) | 4,623,169 | 1,057,402 | 5,680,571 |
(continues)
(continuation) (Amounts expressed in thousands of Euros)
| Share capital |
Preference shares |
Other equity |
Share | statutory | Other comprehensive income Legal and Fair value and cash flow instruments premium reserves hedged reserves |
Other | Other reserves and retained earnings |
stock | Equity attributed to the Treasury Shareholders of the Bank |
Non -controlling interests (note 44) |
Total equity |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 31 December, 2015 | 4,094,235 | 59,910 | 2,922 | 16,471 | 223,270 | 23,250 | (2,483,578) | 2,687,876 | (1,187) | 4,623,169 | 1,057,402 | 5,680,571 |
| Other comprehensive income | ||||||||||||
| Exchange differences arising on consolidation | - | - | - | - | - | - | (64,138) | - | - | (64,138) | (48,084) | (112,222) |
| Fair value reserves (note 42) | - | - | - | - | - | (7,709) | - | - | - | (7,709) | 8,321 | 612 |
| Actuarial losses | ||||||||||||
| Taxes | - | - | - | - | - | - | 12 | - | - | 12 | - | 12 |
| Net income / (loss) for the period | ||||||||||||
| Continuing operations | - | - | - | - | - | - | - | 32,146 | - | 32,146 | 21,913 | 54,059 |
| Discontinued operations | - | - | - | - | - | - | - | 14,532 | - | 14,532 | 14,473 | 29,005 |
| Total comprehensive income for the period | - | - | - | - | - | (7,709) | (64,126) | 46,678 | - | (25,157) | (3,377) | (28,534) |
| Costs related to the share capital increase | - | - | - | - | - | - | - | 25 | - | 25 | - | 25 |
| Tax related to costs arising from the share capital increase |
- | - | - | - | - | - | - | (5) | - | (5) | - | (5) |
| Dividends of SIM - Seguradora | ||||||||||||
| Internacional de Moçambique, S.A.R.L. | - | - | - | - | - | - | - | - | - | - | (555) | (555) |
| Treasury stock (note 43) | - | - | - | - | - | - | - | - | 320 | 320 | - | 320 |
| Other reserves arising on consolidation (note 42) | - | - | - | - | - | - | - | 514 | - | 514 | (63) | 451 |
| Balance as at 31 March, 2016 | 4,094,235 | 59,910 | 2,922 | 16,471 | 223,270 | 15,541 | (2,547,704) | 2,735,088 | (867) | 4,598,866 | 1,053,407 | 5,652,273 |
| 31 March 2016 | |||||||
|---|---|---|---|---|---|---|---|
| (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 | (1,396) | 560 | (836) | (11,148) | 10,312 | ||
| Taxes | 1,616 | (168) | 1,448 | 3,439 | (1,991) | ||
| 220 | 392 | 612 | (7,709) | 8,321 | |||
| Exchange differences arising on consolidation | (46,128) | (66,094) | (112,222) | (64,138) | (48,084) | ||
| (45,908) | (65,702) | (111,610) | (71,847) | (39,763) | |||
| Items that will not be reclassified to the income statement | |||||||
| Actuarial losses for the period | |||||||
| Taxes | 12 | - | 12 | 12 | - | ||
| Other comprehensive (loss) / income after taxes | (45,896) | (65,702) | (111,598) | (71,835) | (39,763) | ||
| Net income / (loss) for the period | |||||||
| Continuing operations | 54,059 | - | 54,059 | 32,146 | 21,913 | ||
| Discontinued operations | - | 29,005 | 29,005 | 14,532 | 14,473 | ||
| Total comprehensive (loss) / income for the period | 8,163 | (36,697) | (28,534) | (25,157) | (3,377) |
| 31 March 2015 | |||||||
|---|---|---|---|---|---|---|---|
| (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 | 219,362 | (1,007) | 218,355 | 237,533 | (19,178) | ||
| Taxes | (64,445) | 302 | (64,143) | (67,843) | 3,700 | ||
| 154,917 | (705) | 154,212 | 169,690 | (15,478) | |||
| Exchange differences arising on consolidation | 60,366 | 23,954 | 84,320 | 45,474 | 38,846 | ||
| 215,283 | 23,249 | 238,532 | 215,164 | 23,368 | |||
| Items that will not be reclassified to the income statement | |||||||
| Actuarial losses for the period | |||||||
| Taxes | (5,782) | - | (5,782) | (5,782) | - | ||
| Other comprehensive (loss) / income after taxes | 209,501 | 23,249 | 232,750 | 209,382 | 23,368 | ||
| Net income / (loss) for the period | |||||||
| Continuing operations | 83,890 | - | 83,890 | 61,673 | 22,217 | ||
| Discontinued operations | - | 16,673 | 16,673 | 8,740 | 7,933 | ||
| Total comprehensive (loss) / income for the period | 293,391 | 39,922 | 333,313 | 279,795 | 53,518 |
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 three months ended 31 March, 2016 and 2015.
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 2 May 2016 by the Bank's Board of Directors. The financial statements are presented in thousands of Euros, rounded to the nearest thousand.
The consolidated financial statements, for the three months ended 31 March 2016, 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. The financial statements for the three months period ended 31 March 2016 do not include all the information to be published in the annual financial statements.
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2016.
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.
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.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can recognise negative non-controlling interests.
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.
31 March, 2016
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
representation on the Board of Directors or equivalent governing body of the investee;
participation in policy-making processes, including participation in decisions about dividends or other distributions;
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.
Business combinations 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.
Costs directly attributable to the acquisition of a subsidiary are booked directly in the income statement.
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.
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.
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 noncontrolling 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.
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.
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:
group's aggregate exposure to the customer and the existence of overdue loans;
the viability of the customer's business and capability to generate sufficient cash flow to service their debt obligations in the future;
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:
historical loss experience in portfolios with similar risk characteristics;
knowledge of the current economic and credit conditions and its impact on the historical losses level; and
the estimated period between a loss occurring and its identification.
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 charge-off is carried out only for loans that are considered not to be recoverable and fully provided.
(i) Classification, initial recognition and subsequent measurement
Financial assets are recognized on the trade date, thus, in the date that the Group commits to purchase the asset and are classified considering the intent behind them, according to the categories described below:
1) Financial assets and liabilities at fair value through profit and loss
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.
1b) Other financial assets and liabilities at fair value through profit and loss ("Fair Value Option")
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 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, or if it is not framed in the exceptions stated by the rules, 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, an assessment is made 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% 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:
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 to the monetary items is recognised through profit and loss, as well as changes in currency risk of the monetary items.
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.
i) Compound financial instruments
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.
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.
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.
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 to 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).
n) Fee and commission income
Fees and commissions are recognised according to the following criteria:
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.
p) Fiduciary activities
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.
q) Property and equipment
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.
r) Investment property
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 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.
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 proceeded 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 to 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 to 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 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 31 March 2016, 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 31 March 2016 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 period 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:
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 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 'Autoridade de Supervisão de Seguros e Fundos de Pensões' (Portuguese Insurance Regulation) 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 and 7. 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:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net interest income | 292,359 | 297,819 |
| Net gains / (losses) from trading and hedging assets | 15,577 | 14,833 |
| Net gains / (losses) from financial assets available for sale | 12,755 | 176,449 |
| 320,691 | 489,101 |
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Interest and similar income | ||
| Interest on loans and advances | 396,218 | 452,762 |
| Interest on trading securities | 1,437 | 4,957 |
| Interest on other financial assets valued at fair | ||
| value through profit and loss account | 1,510 | - |
| Interest on available for sale financial assets | 49,904 | 51,090 |
| Interest on held to maturity financial assets | 2,261 | 22,689 |
| Interest on hedging derivatives | 25,194 | 25,371 |
| Interest on derivatives associated to financial | ||
| instruments through profit and loss account | 3,225 | 3,272 |
| Interest on deposits and other investments | 6,920 | 7,323 |
| 486,669 | 567,464 | |
| Interest expense and similar charges | ||
| Interest on deposits and other resources | 112,103 | 178,918 |
| Interest on securities issued | 43,298 | 51,919 |
| Interest on subordinated debt | ||
| Hybrid instruments eligible as core tier 1 (CoCos) | ||
| underwritten by the Portuguese State | 16,401 | 15,713 |
| Others | 14,358 | 16,361 |
| Interest on hedging derivatives | 3,873 | 2,803 |
| Interest on derivatives associated to financial | ||
| instruments through profit and loss account | 4,277 | 3,931 |
| 194,310 | 269,645 | |
| 292,359 | 297,819 |
The balance Interest on loans and advances includes the amount of Euros 10,152,000 (31 March 2015: Euros 12,726,000) related to commissions and other gains accounted for in accordance with 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 22,516,000 (31 March 2015: Euros 21,386,000) related to commissions and other costs accounted for under the effective interest method, as referred in the accounting policy described in note 1 m).
The amount of this account is comprised of: Mar 2016 Mar 2015 Euros '000 Euros '000 Dividends from financial assets available for sale 2,044 1,951
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:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Fees and commissions received | ||
| From guarantees | 17,397 | 19,212 |
| From credit and commitments | 1,068 | 507 |
| From banking services | 99,002 | 106,619 |
| From insurance activity | 379 | 537 |
| From securities operations | 21,559 | 23,822 |
| From management and maintenance of accounts | 22,563 | 18,885 |
| From fiduciary and trust activities | 237 | 302 |
| From other services | 26,420 | 17,215 |
| 188,625 | 187,099 | |
| Fees and commissions paid | ||
| From guarantees | 1,169 | 924 |
| From banking services | 17,394 | 18,706 |
| From insurance activity | 553 | 519 |
| From securities operations | 2,468 | 2,464 |
| From other services | 3,092 | 2,201 |
| 24,676 | 24,814 | |
| 163,949 | 162,285 |
The balance Fees and commissions received - From banking services includes the amount of Euros 20,197,000 (31 March 2015: Euros 19,125,000) related to insurance mediation commissions.
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Gains arising on trading and hedging activities | |||
| Foreign exchange activity | 525,258 | 1,044,829 | |
| Transactions with financial instruments recognised | |||
| at fair value through profit and loss account | |||
| Held for trading | |||
| Securities portfolio | |||
| Fixed income | 3,011 | 8,756 | |
| Variable income | 113 | 12 | |
| Certificates and structured securities issued | 27,113 | 15,016 | |
| Derivatives associated to financial | |||
| instruments at fair value through results | 10,889 | 15,320 | |
| Other financial instruments derivatives | 125,472 | 222,592 | |
| Other financial instruments at fair value | |||
| through results | |||
| Securities portfolio | |||
| Other financial instruments | 4,030 | 708 | |
| Repurchase of own issues | 5,759 | 6,468 | |
| Hedging accounting | |||
| Hedging derivatives | 15,398 | 10,768 | |
| Hedged item | 66,156 | 6,345 | |
| Other activity | 25,234 | 760 | |
| 808,433 | 1,331,574 | ||
| Losses arising on trading and hedging activities | |||
| Foreign exchange activity | 503,046 | 1,033,550 | |
| Transactions with financial instruments recognised | |||
| at fair value through profit and loss account | |||
| Held for trading | |||
| Securities portfolio | |||
| Fixed income | 2,635 | 3,218 | |
| Variable income | 101 | 1,033 | |
| Certificates and structured securities issued | 270 | 64,651 | |
| Derivatives associated to financial | |||
| instruments through profit and loss account | 9,278 | 10,405 | |
| Other financial instruments derivatives | 177,844 | 175,484 | |
| Other financial instruments at fair value | |||
| through results | |||
| Securities portfolio | |||
| Fixed income | 2,686 | - | |
| Other financial instruments | 5,766 | 8,481 | |
| Repurchase of own issues | 5,608 | 1,430 | |
| Hedging accounting | |||
| Hedging derivatives | 75,868 | 12,232 | |
| Hedged item | 7,139 | 5,330 | |
| Other activity | 2,615 | 927 | |
| 792,856 | 1,316,741 | ||
| 15,577 | 14,833 |
As mentioned in note 48, the approval of the exchange offer of subordinated securities for shares originated, in 2015, a gain of Euros 34,420,000 in Net gains /
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Gains arising from financial assets available for sale | ||
| Fixed income | 13,187 | 172,007 |
| Variable income | (2) | 4,678 |
| Losses arising from financial assets available for sale | ||
| Fixed income | (430) | (236) |
| 12,755 | 176,449 |
The caption Gains arising from financial assets available for sale - Fixed income - includes, as at 31 March 2016, the amount of Euros 6,000 (31 March 2015: Euros 163,596,000) related to gains resulting from the sale of Portuguese public debt.
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Operating income | ||
| Income from services | 8,356 | 7,128 |
| Cheques and others | 3,347 | 3,402 |
| Other operating income | 1,182 | 189 |
| 12,885 | 10,719 | |
| Operating costs | ||
| Indirect taxes | 4,200 | 3,195 |
| Donations and contributions | 1,107 | 981 |
| Other operating expenses | 19,194 | 23,026 |
| 24,501 | 27,202 | |
| (11,616) | (16,483) |
Mar 2016 Mar 2015
The amount of this account is comprised of:
| Euros '000 | Euros '000 | |
|---|---|---|
| Salaries and remunerations | 102,794 | 107,911 |
| Mandatory social security charges | 26,604 | 27,105 |
| Voluntary social security charges | 5,194 | 6,105 |
| Seniority premium | 828 | 892 |
| Other staff costs | 3,024 | 1,431 |
| 138,444 | 143,444 |
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Water, electricity and fuel | 4,338 | 4,459 |
| Consumables | 1,159 | 1,426 |
| Rents | 24,982 | 25,619 |
| Communications | 5,752 | 6,088 |
| Travel, hotel and representation costs | 1,997 | 2,014 |
| Advertising | 4,949 | 7,548 |
| Maintenance and related services | 5,343 | 5,210 |
| Credit cards and mortgage | 918 | 1,070 |
| Advisory services | 2,038 | 2,864 |
| Information technology services | 4,481 | 4,316 |
| Outsourcing | 18,562 | 18,347 |
| Other specialised services | 5,916 | 5,714 |
| Training costs | 155 | 235 |
| Insurance | 1,034 | 1,284 |
| Legal expenses | 1,482 | 2,117 |
| Transportation | 2,087 | 1,949 |
| Other supplies and services | 6,624 | 6,825 |
| 91,817 | 97,085 |
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Intangible assets: | ||
| Software | 2,570 | 3,061 |
| Other intangible assets | 164 | 40 |
| 2,734 | 3,101 | |
| Property, plant and equipment: | ||
| Land and buildings | 4,878 | 5,535 |
| Equipment | ||
| Furniture | 415 | 449 |
| Machinery | 185 | 244 |
| Computer equipment | 2,022 | 1,954 |
| Interior installations | 491 | 509 |
| Motor vehicles | 1,145 | 967 |
| Security equipment | 413 | 487 |
| Other equipment | 532 | 550 |
| Other tangible assets | - | 1 |
| 10,081 | 10,696 | |
| 12,815 | 13,797 |
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Loans and advances to credit institutions: | ||
| For overdue loans and credit risks | ||
| Impairment charge for the period | - | 2 |
| Write-back for the period | - | (2) |
| - | - | |
| Loans and advances to customers: | ||
| For overdue loans and credit risks | ||
| Impairment charge for the period | 267,033 | 282,706 |
| Write-back for the period | (98,154) | (65,920) |
| Recovery of loans and interest charged-off | (8,222) | (15,739) |
| 160,657 | 201,047 |
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 referred in accounting policy described in note 1 c).
14. Other provisions
The amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Impairment of financial assets available for sale | ||
| Charge for the period | 16,241 | 18,955 |
| 14. Other provisions | ||
| The amount of this account is comprised of: | ||
| Mar 2016 | Mar 2015 | |
| Euros '000 | Euros '000 | |
| Provision for guarantees and other commitments | ||
| Charge for the period | 1,668 | 6,326 |
| Write-back for the period | (11,046) | (2,416) |
| (9,378) | 3,910 | |
| Other provisions for liabilities and charges | ||
| Charge for the period | 3,048 | 6,030 |
The main contributions of the investments accounted for under the equity method to the Group's profit are analysed as follows:
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 6,845 | 6,181 |
| Unicre - Instituição Financeira de Crédito, S.A. | 8,778 | 416 |
| Banque BCP, S.A.S. | 682 | 629 |
| SIBS, S.G.P.S, S.A. | 549 | 719 |
| Banque BCP (Luxembourg), S.A. | 20 | (3) |
| VSC - Aluguer de Veículos Sem Condutor, Lda. | - | 95 |
| Other companies | (3,000) | (1,979) |
| 13,874 | 6,058 |
During December 2015, the Group sold 50% of the capital share of the company VSC - Aluguer de Veículos Sem Condutor, Lda. to GE Capital Holding Portugal, SGPS, Unipessoal Lda.
(6,330) 9,940
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 amount of this account is comprised of:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net income / (loss) before income tax appropriated | ||
| Millennium bcp Gestão de Activos - Sociedade Gestora | ||
| de Fundos de Investimento, S.A. | - | 1,011 |
| Banco Millennium Angola S.A. | 31,982 | 19,401 |
| 31,982 | 20,412 | |
| Taxes | ||
| Millennium bcp Gestão de Activos - Sociedade Gestora | ||
| de Fundos de Investimento, S.A. | - | (235) |
| Banco Millennium Angola S.A. | (2,977) | (3,504) |
| (2,977) | (3,739) | |
| 29,005 | 16,673 |
The earnings per share are calculated as follows:
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Net income / (loss) from continuing operations | 32,146 | 61,673 |
| Appropriated net income / (loss) arising from | ||
| discontinued operations | 14,532 | 8,740 |
| Net income / (loss) | 46,678 | 70,413 |
| Average number of shares | 59,039,023,275 | 54,194,709,415 |
| Basic earnings per share (Euros): | ||
| from continuing operations | 0.002 | 0.004 |
| from discontinued operations | 0.001 | 0.001 |
| 0.003 | 0.005 | |
| Diluted earnings per share (Euros) | ||
| from continuing operations | 0.002 | 0.004 |
| from discontinued operations | 0.001 | 0.001 |
| 0.003 | 0.005 |
The Bank's share capital, amounts to Euros 4,094,235,361.88 and is represented by 59,039,023,275 ordinary, book-entry and nominate shares, without nominal value, which is fully paid.
In June 2015, the Bank carried out an increase in its share capital from Euros 3,706,690,253.08 to Euros 4,094,235,361.88, by the issuance of 4,844,313,860 new ordinary, book-entry shares without nominal value, as a result of the partial and voluntary public tender offer for the acquisition of securities (preferred shares, perpetual securities and subordinated bonds) for exchange of new shares issued at the issue price of Euros 0.0834 per share (of which Euros 0.08 corresponds to the unitary issue value and Euros 0.0034 to share premium) and listing of the new ordinary shares on Euronext Lisbon.
As at 31 March 2016 and 2015 in the calculation of diluted earnings per share, the qualifying hybrid instruments as common equity tier 1 issued in June 2012 and subscribed fully by the State (CoCos), were not considered, by presenting an antidilutive effect and it is not defined the conversion value of the shares to be issued according to the decree 150-A / 2012 of 17 May which will be the basis for determining this effect.
This balance is analysed as follows:
| Mar 2016 Euros '000 |
Dec 2015 Euros '000 |
|
|---|---|---|
| Cash | 513,567 | 625,311 |
| Central Banks | ||
| Bank of Portugal | 638,050 | 171,367 |
| Central Banks abroad | 1,058,792 | 1,043,639 |
| 2,210,409 | 1,840,317 |
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. According to the European Central Bank System for Euro Zone, the cash reserve requirements 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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Credit institutions in Portugal | 1,567 | 1,632 |
| Credit institutions abroad | 554,102 | 675,415 |
| Amounts due for collection | 184,124 | 99,366 |
| 739,793 | 776,413 |
The balance Amounts due for collection represents essentially cheques due for collection on other financial institutions.
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Other loans and advances to Central Banks abroad | 163,827 | 71,934 |
| Other loans and advances to credit institutions in Portugal | 257,619 | 4,274 |
| Other loans and advances to credit institutions abroad | 879,052 | 845,442 |
| 1,300,498 | 921,650 | |
| Impairment for other loans and advances to | ||
| credit institutions | (2) | (2) |
| 1,300,496 | 921,648 |
The changes occurred in impairment for other loans and advances to credit institutions are analysed as follows:
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 3 | 53 |
| Transfers | - | (15) |
| Impairment charge for the period | - | 2 |
| Write-back for the period | - | (2) |
| Exchange rate differences | (1) | 2 |
| Balance on 31 March | 2 | 40 |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Public sector | 1,255,173 | 1,226,557 |
| Asset-backed loans | 30,702,764 | 31,482,461 |
| Personal guaranteed loans | 8,238,912 | 8,243,543 |
| Unsecured loans | 3,213,458 | 3,230,128 |
| Foreign loans | 2,141,588 | 2,207,638 |
| Factoring | 1,519,590 | 1,573,033 |
| Finance leases | 3,313,550 | 3,351,665 |
| 50,385,035 | 51,315,025 | |
| Overdue loans - less than 90 days | 253,158 | 121,846 |
| Overdue loans - Over 90 days | 3,995,389 | 4,001,372 |
| 54,633,582 | 55,438,243 | |
| Impairment for credit risk | (3,450,584) | (3,468,084) |
| 51,182,998 | 51,970,159 |
As at 31 March 2016, the balance Loans and advances to customers includes the amount of Euros 12,716,302,000 (31 December 2015: Euros 12,717,796,000) regarding mortgage loans which are allocated as collateral for 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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Loans not represented by securities | ||
| Discounted bills | 275,175 | 295,697 |
| Current account credits | 2,096,297 | 2,214,611 |
| Overdrafts | 1,575,545 | 1,589,253 |
| Loans | 14,820,841 | 15,141,524 |
| Mortgage loans | 24,845,843 | 25,179,816 |
| Factoring | 1,519,590 | 1,573,033 |
| Finance leases | 3,313,550 | 3,351,665 |
| 48,446,841 | 49,345,599 | |
| Loans represented by securities | ||
| Commercial paper | 1,707,269 | 1,655,569 |
| Bonds | 230,925 | 313,857 |
| 1,938,194 | 1,969,426 | |
| 50,385,035 | 51,315,025 | |
| Overdue loans - less than 90 days | 253,158 | 121,846 |
| Overdue loans - Over 90 days | 3,995,389 | 4,001,372 |
| 54,633,582 | 55,438,243 | |
| Impairment for credit risk | (3,450,584) | (3,468,084) |
| 51,182,998 | 51,970,159 |
The analysis of loans and advances to customers, by sector of activity, is as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 360,144 | 436,051 |
| Mining | 203,218 | 152,525 |
| Food, beverage and tobacco | 619,747 | 614,374 |
| Textiles | 484,194 | 469,481 |
| Wood and cork | 239,413 | 237,402 |
| Paper, printing and publishing | 219,775 | 214,094 |
| Chemicals | 851,337 | 818,068 |
| Machinery, equipment and basic metallurgical | 1,046,537 | 1,053,862 |
| Electricity, water and gas | 935,839 | 1,002,857 |
| Construction | 3,484,002 | 3,562,374 |
| Retail business | 1,249,765 | 1,249,026 |
| Wholesale business | 2,130,331 | 2,146,780 |
| Restaurants and hotels | 945,276 | 1,017,112 |
| Transports and communications | 1,978,255 | 1,972,592 |
| Services | 9,886,446 | 10,052,993 |
| Consumer credit | 4,062,642 | 4,138,491 |
| Mortgage credit | 24,813,958 | 25,048,344 |
| Other domestic activities | 8,011 | 7,713 |
| Other international activities | 1,114,692 | 1,244,104 |
| 54,633,582 | 55,438,243 | |
| Impairment for credit risk | (3,450,584) | (3,468,084) |
| 51,182,998 | 51,970,159 |
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 the Group refer to mortgage loans and are set through specifically created SPE. As at 31 March 2016, the loans and advances referred to these traditional securitization transactions amounts to Euros 572,925,000 (31 December 2015: Euros 586,633,000) 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 finance leases contracts:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Gross amount | 3,741,435 | 3,793,994 |
| Interest not yet due | (427,885) | (442,329) |
| Net book value | 3,313,550 | 3,351,665 |
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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 19,569 | 33,162 |
| Mining | 13,822 | 156 |
| Food, beverage and tobacco | 1,461 | 1,438 |
| Textiles | 849 | 943 |
| Wood and cork | 14,043 | 13,706 |
| Paper, printing and publishing | 454 | 3,541 |
| Chemicals | 1,683 | 1,791 |
| Machinery, equipment and basic metallurgical | 36,167 | 34,997 |
| Electricity, water and gas | 404 | 487 |
| Construction | 33,399 | 48,429 |
| Retail business | 9,427 | 10,005 |
| Wholesale business | 30,366 | 29,696 |
| Restaurants and hotels | 1,699 | 1,647 |
| Transports and communications | 6,525 | 6,957 |
| Services | 18,471 | 18,874 |
| Consumer credit | 107,657 | 108,939 |
| Mortgage credit | 93,441 | 91,900 |
| Other domestic activities | 24 | 26 |
| Other international activities | 7,386 | 8,112 |
| 396,847 | 414,806 |
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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 38,653 | 44,352 |
| Mining | 22,124 | 10,583 |
| Food, beverage and tobacco | 21,006 | 19,357 |
| Textiles | 34,206 | 32,832 |
| Wood and cork | 18,740 | 18,245 |
| Paper, printing and publishing | 10,498 | 11,904 |
| Chemicals | 70,151 | 72,680 |
| Machinery, equipment and basic metallurgical | 82,829 | 79,285 |
| Electricity, water and gas | 4,427 | 4,394 |
| Construction | 1,068,178 | 1,075,106 |
| Retail business | 156,896 | 155,698 |
| Wholesale business | 186,630 | 182,827 |
| Restaurants and hotels | 119,727 | 128,530 |
| Transports and communications | 174,834 | 150,637 |
| Services | 1,290,341 | 1,182,138 |
| Consumer credit | 598,268 | 610,449 |
| Mortgage credit | 317,157 | 315,960 |
| Other domestic activities | 7,994 | 7,691 |
| Other international activities | 25,888 | 20,550 |
| 4,248,547 | 4,123,218 |
The changes occurred in impairment for credit risk are analysed as follows:
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 3,468,084 | 3,482,705 |
| Transfers resulting from changes in the | ||
| Group's structure | 4,246 | 4,600 |
| Other transfers | (32,220) | 164,841 |
| Impairment charge for the period | 267,033 | 282,706 |
| Write-back for the period | (98,154) | (65,920) |
| Loans charged-off | (144,189) | (287,971) |
| Exchange rate differences | (14,217) | 26,371 |
| Balance on 31 March | 3,450,584 | 3,607,332 |
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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 33,537 | 59,971 |
| Mining | 25,863 | 11,639 |
| Food, beverage and tobacco | 17,808 | 17,103 |
| Textiles | 26,646 | 25,712 |
| Wood and cork | 32,121 | 42,976 |
| Paper, printing and publishing | 15,186 | 21,142 |
| Chemicals | 61,215 | 56,619 |
| Machinery, equipment and basic metallurgical | 70,145 | 55,029 |
| Electricity, water and gas | 14,546 | 20,756 |
| Construction | 602,284 | 359,096 |
| Retail business | 128,538 | 109,730 |
| Wholesale business | 164,509 | 157,755 |
| Restaurants and hotels | 90,660 | 75,881 |
| Transports and communications | 186,589 | 206,169 |
| Services | 1,121,101 | 1,417,967 |
| Consumer credit | 454,026 | 330,824 |
| Mortgage credit | 348,565 | 416,542 |
| Other domestic activities | 892 | 6,080 |
| Other international activities | 56,353 | 77,093 |
| 3,450,584 | 3,468,084 |
The analysis of loans charged-off, by sector of activity, is as follows:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Agriculture | 6,299 | 1,666 |
| Mining | 7 | 133 |
| Food, beverage and tobacco | 73 | 292 |
| Textiles | 2,834 | 4,039 |
| Wood and cork | 179 | 385 |
| Paper, printing and publishing | 1,871 | 360 |
| Chemicals | 3,320 | 413 |
| Machinery, equipment and basic metallurgical | 1,409 | 1,846 |
| Electricity, water and gas | 23 | 49 |
| Construction | 32,707 | 12,116 |
| Retail business | 4,310 | 4,751 |
| Wholesale business | 3,407 | 8,314 |
| Restaurants and hotels | 13,869 | 35,120 |
| Transports and communications | 5,186 | 176,831 |
| Services | 37,647 | 23,417 |
| Consumer credit | 26,617 | 16,548 |
| Mortgage credit | 2,532 | 1,417 |
| Other domestic activities | 66 | 80 |
| Other international activities | 1,833 | 194 |
| 144,189 | 287,971 |
In compliance with the accounting policy described in note 1 c), loans and advances to customers are charged-off when there are no feasible expectations, 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 are effectively received. This charge-off is carried out only for loans that are considered not to be recoverable and fully provided.
The analysis of recovered loans and interest, during the first quarter of 2016 and 2015, by sector of activity, is as follows:
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Agriculture | 8 | 13 |
| Mining | 178 | 1 |
| Food, beverage and tobacco | 69 | 10 |
| Textiles | 710 | 40 |
| Wood and cork | 60 | 3 |
| Paper, printing and publishing | 38 | - |
| Chemicals | 105 | 15 |
| Machinery, equipment and basic metallurgical | 242 | 55 |
| Electricity, water and gas | 13 | 7 |
| Construction | 4,084 | 13,910 |
| Retail business | 144 | 221 |
| Wholesale business | 533 | 259 |
| Restaurants and hotels | 52 | 4 |
| Transports and communications | 9 | 26 |
| Services | 401 | 195 |
| Consumer credit | 1,463 | 616 |
| Mortgage credit | 29 | - |
| Other domestic activities | 45 | 16 |
| Other international activities | 39 | 348 |
| 8,222 | 15,739 |
The balance Financial assets held for trading, Other financial assets held for trading at fair value through profit or loss and Financial assets available for sale is analysed as follows:
| Mar 2016 Euros '000 |
Dec 2015 Euros '000 |
|
|---|---|---|
| Bonds and other fixed income securities | ||
| Issued by public entities | 9,288,842 | 7,201,261 |
| Issued by other entities | 1,773,595 | 2,376,286 |
| 11,062,437 | 9,577,547 | |
| Overdue securities | 3,725 | 4,078 |
| Impairment for overdue securities | (3,722) | (4,075) |
| 11,062,440 | 9,577,550 | |
| Shares and other variable income securities | 1,604,463 | 1,617,348 |
| 12,666,903 | 11,194,898 | |
| Trading derivatives | 952,927 | 924,955 |
| 13,619,830 | 12,119,853 |
The portfolio of Financial assets held for trading, Other financial assets held for trading at fair value through profit or loss and Financial assets available for sale securities, net of impairment, as at 31 March 2016, is analysed as follows:
| Mar 2016 | ||||||
|---|---|---|---|---|---|---|
| Other financial assets | ||||||
| at fair value | Available | |||||
| Trading | through profit or loss | for sale | Total | |||
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |||
| Fixed income: | ||||||
| Bonds issued by public entities | ||||||
| Portuguese issuers | 100,322 | 150,833 | 3,748,906 | 4,000,061 | ||
| Foreign issuers | 131,945 | - | 3,259,113 | 3,391,058 | ||
| Bonds issued by other entities | ||||||
| Portuguese issuers | 8,928 | - | 1,161,921 | 1,170,849 | ||
| Foreign issuers | 57,013 | - | 549,458 | 606,471 | ||
| Treasury bills and other | ||||||
| Government bonds | 741,066 | - | 1,156,657 | 1,897,723 | ||
| 1,039,274 | 150,833 | 9,876,055 | 11,066,162 | |||
| Impairment for overdue securities | - | - | (3,722) | (3,722) | ||
| 1,039,274 | 150,833 | 9,872,333 | 11,062,440 | |||
| Variable income: | ||||||
| Shares in Portuguese companies | 15,273 | - | 62,539 | 77,812 | ||
| Shares in foreign companies | 273 | - | 86,159 | 86,432 | ||
| Investment fund units | 1,279 | - | 1,438,583 | 1,439,862 | ||
| Other securities | 357 | - | - | 357 | ||
| 17,182 | - | 1,587,281 | 1,604,463 | |||
| Trading derivatives | 952,927 | - | - | 952,927 | ||
| 2,009,383 | 150,833 | 11,459,614 | 13,619,830 |
The portfolio of Financial assets held for trading, Other financial assets held for trading at fair value through profit or loss and Financial assets available for sale securities, net of impairment, as at 31 December 2015, is analysed as follows:
| Dec 2015 | ||||||
|---|---|---|---|---|---|---|
| Other financial assets | ||||||
| at fair value | Available | |||||
| Trading | through profit or loss | for sale | Total | |||
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |||
| Fixed income: | ||||||
| Bonds issued by public entities | ||||||
| Portuguese issuers | 27,573 | 152,018 | 2,804,243 | 2,983,834 | ||
| Foreign issuers | 136,339 | - | 2,866,542 | 3,002,881 | ||
| Bonds issued by other entities | ||||||
| Portuguese issuers | 20,007 | - | 1,139,881 | 1,159,888 | ||
| Foreign issuers | 62,678 | - | 1,157,798 | 1,220,476 | ||
| Treasury bills and other | ||||||
| Government bonds | - | - | 1,214,546 | 1,214,546 | ||
| 246,597 | 152,018 | 9,183,010 | 9,581,625 | |||
| Impairment for overdue securities | - | - | (4,075) | (4,075) | ||
| 246,597 | 152,018 | 9,178,935 | 9,577,550 | |||
| Variable income: | ||||||
| Shares in Portuguese companies | 15,282 | - | 71,097 | 86,379 | ||
| Shares in foreign companies | 391 | - | 89,924 | 90,315 | ||
| Investment fund units | 1,321 | - | 1,439,074 | 1,440,395 | ||
| Other securities | 259 | - | - | 259 | ||
| 17,253 | - | 1,600,095 | 1,617,348 | |||
| Trading derivatives | 924,955 | - | - | 924,955 | ||
| 1,188,805 | 152,018 | 10,779,030 | 12,119,853 |
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 at 31 March 2016, the amount of fair value reserves of Euros 63,870,000 (31 December 2015: Euros 43,222,000) is presented net of impairment losses in the amount of Euros 328,632,000 (31 December 2015: Euros 317,423,000).
The portfolio of financial assets available for sale, as at 31 March 2016, is analysed as follows:
| Mar 2016 | ||||||
|---|---|---|---|---|---|---|
| Amortised cost Euros '000 |
Impairment Euros '000 |
Amortised cost net of impairment Euros '000 |
Fair value reserves Euros '000 |
Fair value hedge adjustments Euros '000 |
Total Euros '000 |
|
| Fixed income: | ||||||
| Bonds issued by public entities | ||||||
| Portuguese issuers | 3,884,327 | - | 3,884,327 | (214,041) | 78,620 | 3,748,906 |
| Foreign issuers | 3,249,994 | - | 3,249,994 | 9,119 | - | 3,259,113 |
| Bonds issued by other entities | ||||||
| Portuguese issuers | 1,224,506 | (90,846) | 1,133,660 | 24,539 | - | 1,158,199 |
| Foreign issuers | 538,723 | - | 538,723 | 10,735 | - | 549,458 |
| Treasury bills and other | ||||||
| Government bonds | 1,156,711 | (6) | 1,156,705 | (48) | - | 1,156,657 |
| 10,054,261 | (90,852) | 9,963,409 | (169,696) | 78,620 | 9,872,333 | |
| Variable income: | ||||||
| Shares in Portuguese companies | 148,082 | (88,861) | 59,221 | 3,318 | - | 62,539 |
| Shares in foreign companies | 42,782 | (275) | 42,507 | 43,652 | - | 86,159 |
| Investment fund units | 1,528,371 | (148,644) | 1,379,727 | 58,856 | - | 1,438,583 |
| 1,719,235 | (237,780) | 1,481,455 | 105,826 | - | 1,587,281 | |
| 11,773,496 | (328,632) | 11,444,864 | (63,870) | 78,620 | 11,459,614 |
The portfolio of financial assets available for sale, as at 31 December 2015, is analysed as follows:
| Dec 2015 | ||||||
|---|---|---|---|---|---|---|
| Amortised cost Euros '000 |
Impairment Euros '000 |
Amortised cost net of impairment Euros '000 |
Fair value reserves Euros '000 |
Fair value hedge adjustments Euros '000 |
Total Euros '000 |
|
| Fixed income: | ||||||
| Bonds issued by public entities | ||||||
| Portuguese issuers | 2,901,838 | - | 2,901,838 | (116,661) | 19,066 | 2,804,243 |
| Foreign issuers | 2,860,927 | - | 2,860,927 | 5,615 | - | 2,866,542 |
| Bonds issued by other entities | ||||||
| Portuguese issuers | 1,178,788 | (91,193) | 1,087,595 | 48,211 | - | 1,135,806 |
| Foreign issuers | 1,150,464 | - | 1,150,464 | 7,334 | - | 1,157,798 |
| Treasury bills and other | ||||||
| Government bonds | 1,214,607 | (8) | 1,214,599 | (53) | - | 1,214,546 |
| 9,306,624 | (91,201) | 9,215,423 | (55,554) | 19,066 | 9,178,935 | |
| Variable income: | ||||||
| Shares in Portuguese companies | 151,974 | (85,002) | 66,972 | 4,125 | - | 71,097 |
| Shares in foreign companies | 46,645 | (292) | 46,353 | 43,571 | - | 89,924 |
| Investment fund units | 1,528,922 | (140,928) | 1,387,994 | 51,080 | - | 1,439,074 |
| 1,727,541 | (226,222) | 1,501,319 | 98,776 | - | 1,600,095 | |
| 11,034,165 | (317,423) | 10,716,742 | 43,222 | 19,066 | 10,779,030 |
The analysis of Financial assets held for trading, Other financial assets held for trading at fair value through profit or loss and Financial assets available for sale by sector of activity as at 31 March 2016 is as follows:
| Mar 2016 | |||||
|---|---|---|---|---|---|
| Other | |||||
| Financial | Overdue | ||||
| Bonds | Shares | Assets | Securities | Total | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Food, beverage and tobacco | - | - | - | 3 | 3 |
| Textiles | - | 7,447 | - | 203 | 7,650 |
| Wood and cork | - | - | - | 998 | 998 |
| Paper, printing and publishing | 13,995 | 63 | - | - | 14,058 |
| Chemicals | 24,897 | 14 | - | - | 24,911 |
| Machinery, equipment and basic metallurgical | 627 | 7 | - | - | 634 |
| Construction | - | 950 | - | 2,394 | 3,344 |
| Retail business | 3,000 | 1,183 | - | - | 4,183 |
| Wholesale business | - | 459 | - | 126 | 585 |
| Restaurants and hotels | - | 14,293 | - | - | 14,293 |
| Transport and communications | 530,140 | 27,881 | - | - | 558,021 |
| Services | 1,200,936 | 111,936 | 1,439,859 | 1 | 2,752,732 |
| Other international activities | - | 11 | 360 | - | 371 |
| 1,773,595 | 164,244 | 1,440,219 | 3,725 | 3,381,783 | |
| Government and Public securities | 7,391,119 | - | 1,897,723 | - | 9,288,842 |
| Impairment for overdue securities | - | - | - | (3,722) | (3,722) |
| 9,164,714 | 164,244 | 3,337,942 | 3 | 12,666,903 |
The analysis of Financial assets held for trading, Other financial assets held for trading at fair value through profit or loss and Financial assets available for sale by sector of activity as at 31 December 2015 is as follows:
| Dec 2015 | ||||
|---|---|---|---|---|
| Bonds Euros '000 |
Shares Euros '000 |
Other Financial Assets Euros '000 |
Overdue Securities Euros '000 |
Total Euros '000 |
| - | - | - | 3 | 3 |
| - | 7,447 | - | 361 | 7,808 |
| - | - | - | 998 | 998 |
| 13,240 | 37 | - | - | 13,277 |
| 25,000 | 7 | - | - | 25,007 |
| - | 7 | - | - | 7 |
| - | 945 | - | 2,539 | 3,484 |
| 3,000 | 1,346 | - | - | 4,346 |
| - | 852 | - | 176 | 1,028 |
| - | 14,293 | - | - | 14,293 |
| 480,875 | 35,403 | - | - | 516,278 |
| 1,854,171 | 116,353 | 1,439,800 | 1 | 3,410,325 |
| - | 4 | 854 | - | 858 |
| 2,376,286 | 176,694 | 1,440,654 | 4,078 | 3,997,712 |
| 5,986,715 | - | 1,214,546 | - | 7,201,261 |
| - | - | - | (4,075) | (4,075) |
| 8,363,001 | 176,694 | 2,655,200 | 3 | 11,194,898 |
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: Assets Liabilities Assets Liabilities Euros '000 Euros '000 Euros '000 Euros '000 Hedging instruments Swaps 128,735 470,510 72,957 541,230 Others - - 170 - 128,735 470,510 73,127 541,230 Mar 2016 Dec 2015
The balance Financial assets held to maturity is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Bonds and other fixed income securities | ||
| Issued by Government and public entities | 102,303 | 118,125 |
| Issued by other entities | 371,735 | 376,766 |
| 474,038 | 494,891 |
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:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Transports and communications | 173,580 | 172,658 |
| Services | 198,155 | 204,108 |
| 371,735 | 376,766 | |
| Government and Public securities | 102,303 | 118,125 |
| 474,038 | 494,891 |
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, in which are included fixed income securities.
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Portuguese credit institutions | 45,425 | 34,465 |
| Foreign credit institutions | 32,476 | 31,776 |
| Other Portuguese companies | 248,671 | 243,943 |
| Other foreign companies | 4,930 | 5,545 |
| 331,502 | 315,729 |
The balance Investments in associated companies is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 227,093 | 222,914 |
| Unicre - Instituição Financeira de Crédito, S.A. | 45,425 | 34,465 |
| Banque BCP, S.A.S. | 29,919 | 29,240 |
| SIBS, S.G.P.S, S.A. | 20,199 | 19,651 |
| Banque BCP (Luxembourg), S.A. | 2,557 | 2,536 |
| Others | 6,309 | 6,923 |
| 331,502 | 315,729 |
These investments correspond to unquoted companies. According to the accounting policy described in note 1 b), these investments are measured at 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 48.
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Real estate and other assets arising | ||
| from recovered loans | 1,970,916 | 1,964,716 |
| Subsidiaries acquired exclusively with the purpose of | ||
| short-term sale | 65,815 | 65,836 |
| 2,036,731 | 2,030,552 | |
| Impairment | (253,119) | (265,170) |
| 1,783,612 | 1,765,382 |
The assets included in this balance are accounted for in accordance with the accounting policy note 1 k).
The balance Real estate 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 where advertises these properties and through partnerships with the mediation of companies having more ability for the product that every time the Bank has for sale. 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 39,444,000 (31 December 2015: Euros 31,121,000).
As at 31 March 2016, the balance Real estate and other assets arising from recovered loans includes the amount of Euros 321,249,000 (31 December 2015: Euros 326,451,000) 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.
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.
This balance is analysed as follows: As at 31 March 2016, the balance Investment property includes the amount of Euros 140,286,000 (31 December 2015: Euros 144,644,000) 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.
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Land and buildings | 1,012,829 | 1,058,719 |
| Equipment | ||
| Furniture | 86,876 | 88,230 |
| Machinery | 53,645 | 55,715 |
| Computer equipment | 294,650 | 298,890 |
| Interior installations | 143,904 | 147,051 |
| Motor vehicles | 26,315 | 27,238 |
| Security equipment | 76,626 | 80,307 |
| Other equipment | 30,954 | 31,157 |
| Work in progress | 20,431 | 16,661 |
| Other tangible assets | 3,896 | 4,711 |
| 1,750,126 | 1,808,679 | |
| Accumulated depreciation | ||
| Charge for the period | (10,081) | (41,773) |
| Accumulated charge for the previous periods | (1,113,164) | (1,096,035) |
| (1,123,245) | (1,137,808) | |
| 626,881 | 670,871 |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Intangible assets | ||
| Software | 107,499 | 120,432 |
| Other intangible assets | 52,570 | 52,496 |
| 160,069 | 172,928 | |
| Accumulated depreciation | ||
| Charge for the period | (2,734) | (12,305) |
| Accumulated charge for the previous periods | (125,139) | (125,401) |
| (127,873) | (137,706) | |
| 32,196 | 35,222 | |
| Goodwill | ||
| Bank Millennium, S.A. (Poland) | 125,447 | 125,447 |
| Real estate and mortgage credit | 40,859 | 40,859 |
| Unicre - Instituição Financeira de Crédito, S.A. | 7,436 | 7,436 |
| Others | 18,611 | 18,659 |
| 192,353 | 192,401 | |
| Impairment | ||
| Others | (16,707) | (16,707) |
| 175,646 | 175,694 | |
| 207,842 | 210,916 |
Deferred income tax assets and liabilities, as at 31 March 2016 and 31 December 2015, are analysed as follows:
| Mar 2016 | Dec 2015 | |||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | Net | Assets | Liabilities | Net | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| Deferred taxes not depending | ||||||
| on the future profits | ||||||
| Impairment losses | 507,339 | - | 507,339 | 940,454 | - | 940,454 |
| Employee benefits | 763,855 | - | 763,855 | 767,077 | - | 767,077 |
| 1,271,194 | - | 1,271,194 | 1,707,531 | - | 1,707,531 | |
| Deferred taxes depending | ||||||
| on the future profits | ||||||
| Intangible assets | 43 | - | 43 | 43 | - | 43 |
| Other tangible assets | 7,221 | 3,809 | 3,412 | 7,370 | 3,825 | 3,545 |
| Impairment losses | 864,832 | 14,762 | 850,070 | 930,319 | 521,777 | 408,542 |
| Employee benefits | 3,309 | - | 3,309 | 2,637 | - | 2,637 |
| Financial assets available for sale | 32,852 | 42,320 | (9,468) | 27,498 | 33,694 | (6,196) |
| Derivatives | - | 7,447 | (7,447) | - | 7,663 | (7,663) |
| Tax losses carried forward | 317,720 | - | 317,720 | 318,494 | - | 318,494 |
| Others | 170,782 | 44,208 | 126,574 | 168,731 | 48,968 | 119,763 |
| 1,396,759 | 112,546 | 1,284,213 | 1,455,092 | 615,927 | 839,165 | |
| Total deferred taxes | 2,667,953 | 112,546 | 2,555,407 | 3,162,623 | 615,927 | 2,546,696 |
| Offset between deferred tax assets | ||||||
| and deferred tax liabilities | (96,507) | (96,507) | - | (601,117) | (601,117) | - |
| Net deferred taxes | 2,571,446 | 16,039 | 2,555,407 | 2,561,506 | 14,810 | 2,546,696 |
The expire date of the recognised tax losses carried forward is presented as follows:
| Expire date | Euros '000 | Euros '000 |
|---|---|---|
| 2016 | 1,655 | 2,072 |
| 2017 | 29,739 | 30,019 |
| 2018 | 113,035 | 113,145 |
| 2019 | 186 | 186 |
| 2020 | 75 | 67 |
| 2021 | 24 | - |
| 2022 and following years | 173,006 | 173,005 |
| 317,720 | 318,494 |
In accordance with the accounting policy and with the requirements of IAS 12, the deferred tax assets were recognized based on the Group's expectation of their recoverability. The assessment of the recoverability of deferred tax assets was performed for each entity included in the consolidation perimeter based on the respective business plans approved by the Board of Directors for the period 2016-2018.
The amount of unrecognized deferred taxes is as follows:
| Mar 2016 | Dec 2015 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Tax losses carried forward | 444,436 | 443,985 |
The impact of income taxes in Net (loss) / income and in other captions of Group's equity, as at 31 March 2016, is analysed as follows:
| Mar 2016 | ||||||
|---|---|---|---|---|---|---|
| Net income / (loss) Euros '000 |
Reserves and retained earnings Euros '000 |
Exchange differences Euros '000 |
Discontinued operations and other variations Euros '000 |
|||
| Deferred taxes | ||||||
| Deferred taxes not depending | ||||||
| on the future profits | ||||||
| Impairment losses | (14,629) | (418,486) | - | - | ||
| Employee benefits | (3,262) | 40 | - | - | ||
| (17,891) | (418,446) | - | - | |||
| Deferred taxes depending | ||||||
| on the future profits | ||||||
| Other tangible assets | (125) | - | (8) | - | ||
| Impairment losses | 4,157 | 439,531 | (2,160) | - | ||
| Employee benefits | 675 | (4) | 1 | - | ||
| Financial assets available for sale | - | 4,115 | (7,387) | - | ||
| Derivatives | 1,206 | - | (990) | - | ||
| Tax losses carried forward | 20,205 | (20,911) | (68) | - | ||
| Others | 1,329 | (2,769) | 8,251 | - | ||
| 27,447 | 419,962 | (2,361) | - | |||
| 9,556 | 1,516 | (2,361) | - | |||
| Current taxes | (24,554) | (61) | - | - | ||
| (14,998) | 1,455 | (2,361) | - |
The impact of income taxes in Net (loss) / income and in other captions of Group's equity, as at 31 December 2015, is analysed as follows:
| Dec 2015 | ||||||
|---|---|---|---|---|---|---|
| Net income / (loss) Euros '000 |
Reserves and retained earnings Euros '000 |
Exchange differences Euros '000 |
Discontinued operations and other variations Euros '000 |
|||
| Deferred taxes | ||||||
| Deferred taxes not depending | ||||||
| on the future profits | ||||||
| Impairment losses | 52,552 | - | - | - | ||
| Employee benefits | 15,547 | 65,951 | - | - | ||
| 68,099 | 65,951 | - | - | |||
| Deferred taxes depending | ||||||
| on the future profits | ||||||
| Other tangible assets | 90 | - | 8 | - | ||
| Impairment losses | 99,125 | - | 1,039 | - | ||
| Employee benefits | (284) | (18) | (816) | (445) | ||
| Financial assets available for sale | - | 25,670 | - | - | ||
| Derivatives | (6,079) | - | 113 | - | ||
| Tax losses carried forward | (137,289) | 20,050 | 966 | - | ||
| Others | 19,687 | - | (1,047) | - | ||
| (24,750) | 45,702 | 263 | (445) | |||
| 43,349 | 111,653 | 263 | (445) | |||
| Current taxes | (99,746) | 261 | - | - | ||
| (56,397) | 111,914 | 263 | (445) |
The reconciliation of the effective tax rate, arising from the permanent effects, is analysed as follows:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net income / (loss) before income taxes | 69,057 | 116,706 |
| Current tax rate | 29.5% | 29.5% |
| Expected tax | (20,372) | (34,428) |
| Accruals for the purpose of calculating the taxable income | (9,652) | (25,840) |
| Deductions for the purpose of calculating the taxable income | 14,402 | 12,414 |
| Fiscal incentives not recognised in profit/loss accounts | 1,032 | 15 |
| Effect of the difference of rate tax and of deferred tax | ||
| not recognised previously | (37) | 15,883 |
| Correction of previous periods | 87 | (148) |
| (Autonomous tax) / tax credits | (458) | (712) |
| (14,998) | (32,816) | |
| Effective rate | 21.7% | 28.1% |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Debtors | 184,502 | 147,793 |
| Supplementary capital contributions | 210,375 | 208,951 |
| Amounts due for collection | 21,074 | 34,302 |
| Recoverable tax | 25,034 | 25,239 |
| Recoverable government subsidies on interest | ||
| on mortgage loans | 10,357 | 9,117 |
| Associated companies | 369 | 1,535 |
| Interest and other amounts receivable | 54,407 | 52,708 |
| Prepayments and deferred costs | 41,359 | 38,870 |
| Amounts receivable on trading activity | 70,479 | 177,439 |
| Amounts due from customers | 202,044 | 223,907 |
| Reinsurance technical provision | 3,387 | 3,423 |
| Sundry assets | 301,689 | 291,887 |
| 1,125,076 | 1,215,171 | |
| Impairment for other assets | (243,409) | (240,943) |
| 881,667 | 974,228 |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Central Banks | 6,356,642 | 5,863,401 |
| Credit institutions in Portugal | 333,681 | 155,548 |
| Credit institutions abroad | 4,123,585 | 2,572,096 |
| 10,813,908 | 8,591,045 |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Deposits from customers: | ||
| Repayable on demand | 19,832,098 | 20,543,468 |
| Term deposits | 24,315,861 | 24,604,427 |
| Saving accounts | 2,577,412 | 2,372,829 |
| Structured deposits | 3,794,380 | 3,593,761 |
| Treasury bills and other assets sold | ||
| under repurchase agreement | 89,985 | 89,966 |
| Others | 404,686 | 334,132 |
| 51,014,422 | 51,538,583 |
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: | ||
|---|---|---|
| Mar 2016 | Dec 2015 | |
| Euros '000 | Euros '000 | |
| Debt securities at amortized cost | ||
| Bonds | 1,535,230 | 1,691,299 |
| Covered bonds | 1,326,421 | 1,331,190 |
| MTNs | 418,524 | 546,739 |
| Securitizations | 415,330 | 439,013 |
| 3,695,505 | 4,008,241 | |
| Accruals | 47,213 | 44,430 |
| 3,742,718 | 4,052,671 | |
| Debt securities at fair value through profit and loss | ||
| Bonds | 40,106 | 43,607 |
| MTNs | 160,255 | 160,150 |
| 200,361 | 203,757 | |
| Accruals | 5,182 | 3,996 |
| 205,543 | 207,753 | |
| Certificates | 514,916 | 507,845 |
| 4,463,177 | 4,768,269 |
The balance is analysed as follows:
| Mar 2016 Euros '000 |
Dec 2015 Euros '000 |
|
|---|---|---|
| Short selling securities | 49,743 | - |
| FRA | - | 8 |
| Swaps | 711,433 | 638,813 |
| Options | 72,270 | 69,090 |
| Embedded derivatives | 6,970 | 9,335 |
| Forwards | 7,221 | 5,982 |
| 847,637 | 723,228 |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Provision for guarantees and other commitments | 64,389 | 74,710 | |
| Technical provision for the insurance activity | |||
| For direct insurance and reinsurance accepted | |||
| Unearned premium / reserve | 15,163 | 14,695 | |
| Life insurance | 41,647 | 46,553 | |
| Bonuses and rebates | 3,141 | 3,039 | |
| Other technical provisions | 7,756 | 8,905 | |
| Provision for pension costs | 19 | - | |
| Other provisions for liabilities and charges | 141,073 | 136,908 | |
| 273,188 | 284,810 |
| Mar 2016 Euros '000 |
Mar 2015 Euros '000 |
|
|---|---|---|
| Balance on 1 January | 74,710 | 250,158 |
| Transfers resulting from changes in the | ||
| Group's structure | (146) | (13) |
| Other transfers | - | (163,741) |
| Charge for the period | 1,668 | 6,326 |
| Write-back for the period | (11,046) | (2,416) |
| Exchange rate differences | (797) | 1,185 |
| Balance on 31 March | 64,389 | 91,499 |
The balance Other transfers corresponds, mainly to transfer for credit risks impairment.
Changes in Other provisions for liabilities and charges are analysed as follows:
| Mar 2016 Mar 2015 |
||
|---|---|---|
| Euros '000 | Euros '000 | |
| Balance on 1 January | 136,908 | 127,403 |
| Transfers resulting from changes in the | ||
| Group's structure | 260 | - |
| Other transfers | 2,658 | - |
| Charge for the period | 3,048 | 6,030 |
| Amounts charged-off | (1,007) | - |
| Exchange rate differences | (794) | (395) |
| Balance on 31 March | 141,073 | 133,038 |
These provisions were based on the probability of occurrence of certain contingencies related to risks inherent to the Group's activity, being reviewed at each reporting date to reflect the best estimate of the amount and respective probability of payment.
This balance is analysed as follows:
| Mar 2016 | ||
|---|---|---|
| Euros '000 | Euros '000 | |
| Bonds | ||
| Non Perpetual Bonds | 854,863 | 849,026 |
| Perpetual Bonds | 28,741 | 28,760 |
| CoCos | 758,805 | 759,813 |
| 1,642,409 | 1,637,599 | |
| Accruals | 28,971 | 7,772 |
| 1,671,380 | 1,645,371 |
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 Bank repaid in May 2014 the amount of Euros 400,000,000 of core tier I capital instruments (CoCos) issued by the Portuguese State, and in August 2014 repaid Euros 1,850,000,000 of common equity tier I capital instruments (CoCos), 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.
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.
As at 31 March 2016, 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) | 52,587 | 52,587 |
| Mbcp Ob Cx Sub 2 Serie 2008-2018 | October, 2008 | October, 2018 | See reference (i) | 14,888 | 14,888 |
| Bcp Ob Sub Jun 2020 - Emtn 727 | June, 2010 | June, 2020 | See reference (ii) | 14,791 | 14,791 |
| Bcp Ob Sub Aug 2020 - Emtn 739 | August, 2010 | August, 2020 | See reference (iii) | 9,278 | 9,278 |
| Bcp Ob Sub Mar 2021 - Emtn 804 | March, 2011 | March, 2021 | Euribor 3M + 3.75% | 114,000 | 114,000 |
| Bcp Ob Sub Apr 2021 - Emtn 809 | April, 2011 | April, 2021 | Euribor 3M + 3.75% | 64,100 | 64,100 |
| Bcp Ob Sub 3S Apr 2021 - Emtn 812 | April, 2011 | April, 2021 | Euribor 3M + 3.75% | 35,000 | 35,000 |
| Bcp Sub 11/25.08.2019 - Emtn 823 | August, 2011 | August, 2019 | Fixed rate 6.383% | 7,500 | 8,138 |
| Bcp Subord Sep 2019 - Emtn 826 | October, 2011 | September, 2019 | Fixed rate 9.31% | 50,000 | 52,861 |
| Bcp Subord Nov 2019 - Emtn 830 | November, 2011 | November, 2019 | Fixed rate 8.519% | 40,000 | 41,526 |
| Bcp Subord Dec 2019 - Emtn 833 | December, 2011 | December, 2019 | Fixed rate 7.15% | 26,600 | 27,081 |
| Mill Bcp Subord Jan 2020 - Emtn 834 | January, 2012 | January, 2020 | Fixed rate 7.01% | 14,000 | 13,803 |
| Mbcp Subord Feb 2020 - Vm Sr. 173 | April, 2012 | February, 2020 | Fixed rate 9% | 23,000 | 23,044 |
| Bcp Subord Apr 2020 - Vm Sr 187 | April, 2012 | April, 2020 | Fixed rate 9.15% | 51,000 | 51,144 |
| Bcp Subord 2 Serie Apr 2020 - Vm 194 | April, 2012 | April, 2020 | Fixed rate 9% | 25,000 | 24,965 |
| Bcp Subordinadas Jul 20-Emtn 844 | July, 2012 | July, 2020 | Fixed rate 9% | 26,250 | 25,606 |
| Bank Millennium: | |||||
| MB Finance AB | December, 2007 | December, 2017 | Euribor 6M + 2% | 150,380 | 150,380 |
| BCP Finance Bank: | |||||
| BCP Fin Bank Ltd EMTN - 295 | December, 2006 | December, 2016 | See reference (iv) | 71,209 | 71,203 |
| BCP Fin Bank Ltd EMTN - 828 | October, 2011 | October, 2021 | Fixed rate 13% | 82,920 | 60,424 |
| Magellan No. 3: | |||||
| Magellan No. 3 Series 3 Class F | June, 2005 | May, 2058 | - | 44 | 44 |
| 854,863 | |||||
| Perpetual Bonds | |||||
| Obrigações Caixa Perpétuas | |||||
| Subord 2002/19jun2012 | June, 2002 | - | See reference (v) | 93 | 70 |
| TOPS BPSM 1997 | December, 1997 | - | Euribor 6M + 0,9% | 23,004 | 23,206 |
| BCP Leasing 2001 | December, 2001 | - | Euribor 3M + 2,25% | 5,465 | 5,465 |
| CoCos | 28,741 | ||||
| Bcp Coco Bonds 12/29.06.2017 | June, 2012 | June, 2017 | See reference (vi) | 750,000 | 758,805 |
| Accruals | 28,971 | ||||
| 1,671,380 |
References:
(i) - 1st year 6%; 2nd to 5th year Euribor 6M + 1%; 6th year and following Euribor 6M + 1.4%;
(ii) - Until the 5th year Fixed rate 3.25%; 6th year and following years Euribor 6M + 1%;
(iii) - 1st year: 3%; 2nd year 3.25%; 3rd year 3.5%; 4th year 4%; 5th year 5%; 6th year and following Euribor 6M + 1.25%;
(iv) - Euribor 3M + 0.3% (0.8% after December 2011);
(v) - Until 40th coupon 6.131%; After 40th coupon Euribor 3M + 2.4%;
(vi) - 1st year: 8.5%; 2nd year 8.75%; 3rd year 9%; 4th year 9.5%; 5th year 10%.
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | ||
|---|---|---|---|
| Euros '000 | Euros '000 | ||
| Creditors: | |||
| Suppliers | 36,232 | 34,562 | |
| From factoring operations | 9,483 | 12,117 | |
| Associated companies | 2 | 120 | |
| Other creditors | 217,285 | 254,531 | |
| Public sector | 39,719 | 44,534 | |
| Interests and other amounts payable | 101,501 | 108,518 | |
| Deferred income | 9,767 | 10,431 | |
| Holiday pay and subsidies | 45,245 | 57,899 | |
| Other administrative costs payable | 2,020 | 2,996 | |
| Amounts payable on trading activity | 108,214 | 131,793 | |
| Other liabilities | 482,924 | 417,174 | |
| 1,052,392 | 1,074,675 |
The Bank's share capital amounts to Euros 4,094,235,361.88 and is represented by 59,039,023,275 ordinary, book-entry and nominates shares, without nominal value, which is fully paid.
Following the authorization given in the Annual General Meeting of Shareholders of 11 May 2015, the Bank carried out an increase in its share capital from Euros 3,706,690,253.08 to Euros 4,094,235,361.88, by the issuance of 4,844,313,860 new ordinary, book-entry shares without nominal value, as a result of the partial and voluntary public tender offer for the acquisition of securities (preferred shares, perpetual securities and subordinated bonds) for exchange of new shares issued at the issue price of Euros 0.0834 per share(of which Euros 0.08 corresponds to the unitary issue value and Euros 0.0034 to share premium) and listing of the new ordinary shares on Euronext Lisbon.
The issue price or value of the Public Exchange Offer was calculated using the volume weighted average quotation of BCP in the last five days applying a discount of 7%. The difference between the issue price (Euros 0.0834 per share), and the issue value (Euros 0.08 per share), resulted in a share premium of Euros 16,470,667.11.
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, in the total amount of Euros 500,000,000, issued on 9 June 2004.
10,000 preference shares with par value of Euros 50,000 perpetual each without voting rights, in the total amount of Euros 500,000,000, issued on 13 October 2005.
In October 2011 and July 2015, the majority of the preference shares were exchanged for new debt instruments. As at 31 March 2016, the balance preference shares amounts to Euros 59,910,000.
The balance other equity 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 offerings of perpetual subordinated securities for ordinary shares, performed in 2011 and 2015. As at 31 March 2016, the balance amounts to Euros 2,922,000.
Pursuant to the conditions of the issue of Core Tier I Capital Instruments underwritten by the State, under Law no. 63-A/2008 and Implementing Order no. 150- A/2012 (CoCos), the Bank cannot distribute dividends until the issue is fully reimbursed.
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. 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.
| This balance is analysed as follows: | Mar 2016 Euros '000 |
Dec 2015 Euros '000 |
|---|---|---|
| Fair value reserves | ||
| Financial assets available for sale | ||
| Potential gains and losses recognised | ||
| in fair value reserves | (63,870) | 43,222 |
| Loans represented by securities (*) | - | (15) |
| Financial assets held to maturity (*) | (478) | (381) |
| Of associated companies and others | 9,550 | 10,559 |
| Cash-flow hedge | 72,485 | (24,550) |
| 17,687 | 28,835 | |
| Tax | ||
| Financial assets available for sale | ||
| Potential gains and losses recognised | ||
| in fair value reserves | 21,106 | (10,167) |
| Loans represented by securities | - | 4 |
| Financial assets held to maturity | 139 | 110 |
| Cash-flow hedge | (23,391) | 4,468 |
| (2,146) | (5,585) | |
| Fair value reserve net of taxes | 15,541 | 23,250 |
| Others | (2,547,704) | (2,483,578) |
| (2,532,163) | (2,460,328) | |
| Other reserves and retained earnings: | ||
| Legal reserve | 193,270 | 193,270 |
| Statutory reserve | 30,000 | 30,000 |
| Other reserves and retained earnings | 2,861,453 | 2,626,089 |
| Other reserves arising on consolidation | (173,043) | (173,557) |
| 2,911,680 | 2,675,802 |
(*) Refers to the amount not accrued of the fair value reserve at the date of reclassification for securities subject to reclassification.
This balance is analysed as follows:
| Banco Comercial | Other | ||
|---|---|---|---|
| Português, S.A. | treasury | ||
| shares | stock | Total | |
| Mar 2016 | |||
| Net book value (Euros '000) | 867 | - | 867 |
| Number of securities | 24,280,365 | (*) | |
| Average book value (Euros) | 0.04 | ||
| Dec 2015 | |||
| Net book value (Euros '000) | 1,187 | - | 1,187 |
| Number of securities | 24,280,365 | (*) | |
| Average book value (Euros) | 0.05 |
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 31 March 2016, Banco Comercial Português, S.A. does not held treasury stocks and does not performed any purchases or sales of own shares during the period. However, this balance includes 24,280,365 shares (31 December 2015: 24,280,365 shares) owned by clients. 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, in accordance with this standard, considered as treasury stock, and, in accordance with the accounting policies, written off from equity.
| This balance is analysed as follows: | ||
|---|---|---|
| Mar 2016 | Dec 2015 | |
| Euros '000 | Euros '000 | |
| Actuarial losses (net of taxes) | (728) | (728) |
| Exchange differences arising on consolidation | (159,855) | (111,771) |
| Fair value reserves | 15,371 | 5,059 |
| Deferred taxes | (3,180) | (1,189) |
| (148,392) | (108,629) | |
| Other reserves and retained earnings | 1,201,799 | 1,166,031 |
| 1,053,407 | 1,057,402 |
| Balance Sheet | Income Statement | |||
|---|---|---|---|---|
| Mar 2016 | Dec 2015 | Mar 2016 | Mar 2015 | |
| Euros '000 | Euros '000 | Euros '000 | Euros '000 | |
| From continuing operations | ||||
| Bank Millennium, S.A. | 779,359 | 754,037 | 15,626 | 13,449 |
| BIM - Banco Internacional de Moçambique, SA | 125,832 | 136,428 | 6,697 | 8,939 |
| Other subsidiaries | (1,032) | (623) | (410) | (171) |
| 904,159 | 889,842 | 21,913 | 22,217 | |
| From discontinued operations | ||||
| Banco Millennium Angola, S.A. | 149,248 | 167,560 | 14,473 | 7,933 |
| 1,053,407 | 1,057,402 | 36,386 | 30,150 | |
This balance is analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Guarantees granted | 4,996,848 | 5,237,115 |
| Guarantees received | 29,912,505 | 31,396,270 |
| Commitments to third parties | 6,815,060 | 7,064,498 |
| Commitments from third parties | 11,561,117 | 11,778,091 |
| Securities and other items held for safekeeping | ||
| on behalf of customers | 130,286,138 | 130,088,758 |
| Securities and other items held under custody | ||
| by the Securities Depository Authority | 135,618,343 | 135,146,255 |
| Other off balance sheet accounts | 134,772,241 | 137,284,775 |
The amounts of Guarantees granted and Commitments to third parties are analysed as follows:
| Mar 2016 | Dec 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Guarantees granted | ||
| Guarantees | 3,984,087 | 4,185,448 |
| Stand-by letter of credit | 63,527 | 84,586 |
| Open documentary credits | 517,675 | 532,323 |
| Bails and indemnities | 431,559 | 434,758 |
| 4,996,848 | 5,237,115 | |
| Commitments to third parties | ||
| Irrevocable commitments | ||
| Term deposits contracts | 33,317 | 929 |
| Irrevocable credit lines | 2,045,923 | 2,077,530 |
| Other irrevocable commitments | 279,659 | 280,288 |
| Revocable commitments | ||
| Revocable credit lines | 3,717,630 | 3,874,928 |
| Bank overdraft facilities | 539,651 | 592,400 |
| Other revocable commitments | 198,880 | 238,423 |
| 6,815,060 | 7,064,498 |
The guarantees granted by the Group may be related to loans 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.
Resolutions of the Annual General Meeting
Banco Comercial Português, S.A. concluded, on 21 April 2016, the Annual General Meeting of Shareholders, with 44.76% of the share capital represented and the following resolutions:
Item One – Approval of the individual and consolidated annual reports, balance sheet and financial statements for 2015;
Item Two – Approval of the proposal for the application of year-end results;
Item Three – Approval of a vote of trust and praise addressed to the Board of Directors, including to the Executive Committee and to the Audit Committee and each one of their members, as well as to the Chartered Accountant and its representative;
Item Four – Approval of the statement on the remuneration policy of the Members of the Management and Supervision Bodies;
Item Five – Election of the External Auditor for the triennial 2016/2018;
Item Six – Election of the Single Auditor and his/her alternate for the triennial 2016/2018;
Item Seven – Approval of the acquisition and sale of own shares or bonds;
Item Eight – Approval of the: (i) the renewal of the authorisation granted by paragraph 1 of Article 5 of the Bank's Articles Association; (ii) suppression of the preference rights of shareholders in one or more share capital increases the Board of Directors may decide to carry out;
Item Nine – Approval on the alteration of the articles of association by adding a new nr. 5 to Article 4;
Item Ten – Approval of the regrouping, without decreasing the share capital, of the shares representing the share capital of the Bank. It was approved with a regrouping quotient of 1:75, corresponding to every 75 (seventy-five) shares prior to the regrouping 1 (one) share after the regrouping.
Assessment process scenarios for ActivoBank
On 24 February 2015, Banco Comercial Português, S.A. informed about the process of evaluation of various strategic scenarios that promoted the appreciation of ActivoBank, the online reference bank in Portugal.
In March 2016, BCP has decided to select Cabot Square Capital LLP, a financial services specialist private equity firm, to a phase of negotiations on an exclusive basis, however no final decision has yet been made regarding the sale of ActivoBank.
Merger of Banco Millennium Angola, S.A. with Banco Privado Atlântico, S.A.
Banco Comercial Português, S.A. (BCP) agreed to carry out a merger of Banco Millennium Angola, S.A. with Banco Privado Atlântico, S.A., thereby creating the conditions for growth in adverse conditions and simultaneously adapting the bank to the implications of recent changes in supervisory equivalence.
BCP signed, on 8 October 2015, a memorandum of understanding with the main shareholder of Banco Privado Atlântico, S.A. (Global Pactum – Gestão de Ativos, S.A.), to merge Banco Millennium Angola, S.A. with Banco Privado Atlântico, S.A., resulting in the second-largest private sector bank in terms of loans to the economy, with a market share of approximately 10% by business volume.
According to the terms of the process, BCP will have significant influence over the new entity, and as a result, will be accounted for by the equity method.
On 25 April 2016, the public deed for the merger of Banco Millennium Angola, S.A. with Banco Privado Atlântico, S.A. was executed.
On 15 January 2016 a presidential proposal of legislation aimed at supporting FX mortgage borrowers was put forward, however without a preliminary assessment of the impact for the banking sector. That assessment was requested to the Polish Financial Supervision Authority which published its results on 15 March. The conclusions presented by the polish financial regulator point to very high potential losses to the banking system which, directly and in the most likely scenario, could reach a minimum amount of PLN 66.9 billion (Euros 15.7 billion) and, in more adverse scenarios, PLN 103.4 billion (Euros 24.3 billion), to which much higher costs to the public accounts and clients would be added. In this context, it is expected that new proposals will be considered. The implementation of solutions that will privilege the fx mortgage borrowers may, depending on their details and scope, significantly deteriorate the profitability and capital position of the Bank.
Previously, according to the Financial Stability Report published by the National Bank of Poland on 10 February 2016, the overall direct costs for the polish banking sector had been estimated that may reach PLN 44 billion (Euros 10.3 billion) and, in case of compulsory restructuring, a further impact of PLN 21 billion (Euros 4.9 billion) has been estimated. In these estimations are not included neither the costs of closing the currency position nor operational costs.
In February 2016 was introduced a new special banking tax over the banking sector in Poland, corresponding to an 0,44% annual rate on the balance of total assets less own funds, polish Treasury bonds and PLN 4 billion (Euros 900 million) tax-exempt amount. Accordingly to the Bank Millennium Poland understanding of methodology to be applied for the tax calculation, the preliminary estimation based on balance sheet positions and own funds as at 31 December 2015, for all monthly calculations, would amount to PLN 186 million (Euros 43.6 million) of charge for entire 2016 year. This tax will be implemented on top of other taxes, which the Bank, as each bank in Poland, is regularly paying.
The amount of banking tax which that will effectively be paid in 2016, may eventually differ from the above estimates, mainly due to variable tax basis which will be used for monthly tax calculation.
Banco Comercial Português, S.A. (BCP) has launched in February 2016 an invitation of offers to tender notes for purchase to holders of the issues listed below. The invitation is limited to a maximum aggregate purchase amount of Euros 300 million. The purpose of the invitation is to proactively manage the Bank's outstanding liabilities and capital base.
| Outstanding | ||
|---|---|---|
| Principal | ||
| Issuer | Issue | Amount (Euros) |
| Banco Comercial Português, S.A | Euros 500.000.000 - 3.375 per cent. Fixed Rate Notes due 27 February 2017 ("Senior Notes") | 500,000,000 |
| Magellan Mortgages No. 2 plc | Euros 930.000.000 Class A (Senior) Mortgage Backed Floating Rate Notes due 2036 | 87,870,120 |
| Magellan Mortgages No. 3 plc | Euros 1.413.750.000 Class A (Senior) Mortgage Backed Floating Rate Notes due 2058 | 396,961,207.50 |
The process of solicitations of offers ended on 23 February 2016. There were validly tendered for purchase Euros 378,509,996.96 in amortised principal amount outstanding of Notes (Euros 103,100,000 in respect of Senior Notes and Euros 275,409,996.96 in respect of Mortgage Backed Notes issued by Magellan Mortgages No. 2 plc e Magellan Mortgages No. 3 plc). The Bank has decided to accept for purchase Euros 85,326,455.52 (amortised principal amount outstanding) of the validly tendered notes. The following table sets out the amounts accepted for each issue and the Bank has determined that the purchase price for the Senior Notes will be 99.0 per cent of its principal amount:
| Accepted | ||
|---|---|---|
| Outstanding | ||
| Principal | ||
| Issuer | Issue | Amount (Euros) |
| Banco Comercial Português, S.A | Euros 500.000.000 - 3.375 per cent. Fixed Rate Notes due 27 February 2017 ("Senior Notes") | 85,300,000 |
| Magellan Mortgages No. 2 plc | Euros 930.000.000 Class A (Senior) Mortgage Backed Floating Rate Notes due 2036 | 26,455.52 |
| Magellan Mortgages No. 3 plc | Euros 1.413.750.000 Class A (Senior) Mortgage Backed Floating Rate Notes due 2058 | 0 |
The settlement date was on 26 February 2016.
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, Companies Banking and Private Banking.
Following the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp), an additional segment named non-Core Business Portfolio was considered, respecting the criteria agreed.
The Retail Banking activity includes the Retail activity of the Group in Portugal, operating as a distribution channel for products and services from subsidiaries of the Group, and the Foreign business segment, operating through subsidiaries 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 Companies Banking includes: (i) Corporate and Large Corporates networks 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) 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, (iii) Specialised Monitoring Division, (iv) the Investment Banking unit, (v) the activity of the Bank's International Division; (vi) Specialised Recovery Division, (vii) the activity of the Real Estate Business Division and (viii) Interfundos.
The Private Banking segment, for purposes of the business segments, comprises (i) the Private Banking network in Portugal and also (ii) Banque Privée BCP in Switzerland and (iii) Millennium bcp Bank & Trust in Cayman Islands. For purposes of the geographical segments excludes Banque Privée BCP and Millennium bcp Bank & Trust that are considered Foreign Business.
The Foreign Business segment, for the purpose of business segments, comprises Bank Millennium in Poland, Millennium bim in Mozambique and Banco Millennium Angola was considered as a discontinued opertaion in march 2016. 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 and in Mozambique by a universal bank targeting companies and individual customers; 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 financial assets ("Affluent" segment); and in Switzerland the Group is represented by Banque Privée BCP, a Private Banking platform under Swiss law.
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 31 March 2016, 71% of this portfolio benefited from asset backed loans, including 67% with real estate collateral and 4% with other assets guarantee.
All other businesses not previously discriminated 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 March 2015 and March 2016. The capital allocation for each segment on those dates, resulted from the application of 10% to the risks managed by each segment, reflecting the application of Basel III methodologies. 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 31 March 2016.
The Group operates with special emphasis in the Portuguese market, and also in a few affinity markets of recognised growth potential. Considering this, the segmental report is structured in Portugal, Poland, Mozambique, Angola (considered discontinued operation) 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. 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.
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.
Notes to the Interim Consolidated Financial Statements 31 March, 2016
As at 31 March 2016, the net contribution of the major operational segments is analysed as follows:
| Commercial Banking | Companies Corporate and Investment |
Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|
| Retail | Foreign | Banking | Private | non core | ||||
| in Portugal | Business (1) | Total | in Portugal | Banking | business | Other | Consolidated | |
| Income statement | ||||||||
| Interest income Interest expense |
136,569 (41,822) |
182,316 (68,239) |
318,885 (110,061) |
96,340 (26,191) |
11,420 (6,240) |
42,072 (36,275) |
17,952 (15,543) |
486,669 (194,310) |
| Net interest income | 94,747 | 114,077 | 208,824 | 70,149 | 5,180 | 5,797 | 2,409 | 292,359 |
| Commissions and other income Commissions and other costs |
97,555 (3,109) |
58,177 (28,931) |
155,732 (32,040) |
41,139 (1,533) |
14,191 (1,608) |
2,571 (8) |
289 (20,109) |
213,922 (55,298) |
| Net commissions and other income | 94,446 | 29,246 | 123,692 | 39,606 | 12,583 | 2,563 | (19,820) | 158,624 |
| Net gains arising from trading activity | (64) | 23,259 | 23,195 | - | 371 | 23,893 | (19,127) | 28,332 |
| Share of profit of associates under the equity method |
- | - | - | - | - | - | 13,874 | 13,874 |
| Gains / (losses) arising from the sale | ||||||||
| of subsidiaries and other assets | - | 435 | 435 | - | - | - | (5,481) | (5,046) |
| Net operating revenue | 189,129 | 167,017 | 356,146 | 109,755 | 18,134 | 32,253 | (28,145) | 488,143 |
| Staff costs and administrative costs Depreciations |
120,442 511 |
76,435 5,702 |
196,877 6,213 |
23,270 117 |
9,888 53 |
4,828 5 |
(4,602) 6,427 |
230,261 12,815 |
| Operating costs | 120,953 | 82,137 | 203,090 | 23,387 | 9,941 | 4,833 | 1,825 | 243,076 |
| Other financial assets impairment | (33,386) | (18,664) | (52,050) | (51,301) | (729) | (32,328) | (40,490) | (176,898) |
| Other assets impairment | - | 589 | 589 | 32 | - | 372 | (105) | 888 |
| Net (loss) / income before income tax |
34,790 | 66,805 | 101,595 | 35,099 | 7,464 | (4,536) | (70,565) | 69,057 |
| Income tax | (10,266) | (19,353) | (29,619) | (10,289) | (2,319) | 1,338 | 25,891 | (14,998) |
| (Loss) / income after income tax from continuing operations |
24,524 | 47,452 | 71,976 | 24,810 | 5,145 | (3,198) | (44,674) | 54,059 |
| (Loss) / income arising from | ||||||||
| discontinued operations (2) | - | 29,005 | 29,005 | - | - | - | - | 29,005 |
| Net (loss) / income after income tax | 24,524 | 76,457 | 100,981 | 24,810 | 5,145 | (3,198) | (44,674) | 83,064 |
| Non-controlling interests | - | (35,132) | (35,132) | - | - | - | (1,254) | (36,386) |
| Net (loss) / income after income tax | 24,524 | 41,325 | 65,849 | 24,810 | 5,145 | (3,198) | (45,928) | 46,678 |
| Balance sheet | ||||||||
| Cash and Loans and advances | ||||||||
| to credit institutions | 9,433,857 | 1,579,713 | 11,013,570 | 1,364,472 | 2,761,863 | 4,372 | (10,893,579) | 4,250,698 |
| Loans and advances to customers | 17,166,401 | 12,770,073 | 29,936,474 | 11,114,080 | 417,818 | 9,297,198 | 417,428 | 51,182,998 |
| Financial assets (3) | 20,320 | 4,344,706 | 4,365,026 | - | 8,297 | 598,368 | 9,250,912 | 14,222,603 |
| Other assets | 163,648 | 542,175 | 705,823 | 47,366 | 18,437 | 568,764 | 5,298,574 | 6,638,964 |
| Total Assets | 26,784,226 | 19,236,667 | 46,020,893 | 12,525,918 | 3,206,415 | 10,468,702 | 4,073,335 | 76,295,263 |
| Deposits from other credit | ||||||||
| institutions | 1,422,480 | 1,600,953 | 3,023,433 | 4,048,162 | 314,838 | 9,738,260 | (6,310,785) | 10,813,908 |
| Deposits from customers | 24,173,173 | 15,142,369 | 39,315,542 | 7,651,470 | 2,709,869 | 288,429 | 1,049,112 | 51,014,422 |
| Debt securities issued | 622,630 | 300,425 | 923,055 | 2,657 | 66,037 | 611 | 3,470,817 | 4,463,177 |
| Other financial liabilities Other liabilities |
- 32,481 |
502,184 506,746 |
502,184 539,227 |
- 38,129 |
8,805 6,916 |
- 3,936 |
2,478,538 773,748 |
2,989,527 1,361,956 |
| Total Liabilities | 26,250,764 | 18,052,677 | 44,303,441 | 11,740,418 | 3,106,465 | 10,031,236 | 1,461,430 | 70,642,990 |
| Equity and non-controlling interests |
533,462 | 1,183,990 | 1,717,452 | 785,500 | 99,950 | 437,466 | 2,611,905 | 5,652,273 |
| Total Liabilities, Equity and non-controlling interests |
26,784,226 | 19,236,667 | 46,020,893 | 12,525,918 | 3,206,415 | 10,468,702 | 4,073,335 | 76,295,263 |
| Number of employees | 4,952 | 9,591 | 14,543 | 584 | 266 | 155 | 1,561 | 17,109 |
(1) Includes the activity of the subsidiary in Angola, considered as discontinued operation;
(2) The amount considered for Angola in discontinued operations corresponds to the book value. The impact of capital allocation in segments base, is reflected in net interest income item; (3) Includes financial assets held for trading, other financial assets held for trading at fair value through profit or loss, financial assets held to maturity, financial assets available for
sale and hedging derivatives.
Note: As at 31 March 2016, the goodwill disclosed in the financial statements is reflected in Mozambique Euros 2 millions and Euros 174 millions in Other Portugal, as described in note 30.
Notes to the Interim Consolidated Financial Statements 31 March, 2016
As at 31 March 2015, the net contribution of the major operational segments is analysed as follows:
| Retail | Commercial Banking Foreign |
Companies Corporate and Investment Banking |
Private | Portfolio non core |
||||
|---|---|---|---|---|---|---|---|---|
| in Portugal | Business (1) | Total | in Portugal | Banking | business | Other (2) | Consolidated | |
| Income statement | ||||||||
| Interest income | 139,056 | 199,678 | 338,734 | 115,784 | 13,693 | 57,519 | 41,734 | 567,464 |
| Interest expense | (79,918) | (84,577) | (164,495) | (31,934) | (11,359) | (41,766) | (20,091) | (269,645) |
| Net interest income | 59,138 | 115,101 | 174,239 | 83,850 | 2,334 | 15,753 | 21,643 | 297,819 |
| Commissions and other income Commissions and other costs |
80,900 (3,227) |
68,606 (21,457) |
149,506 (24,684) |
41,802 (2,354) |
15,755 (1,993) |
3,204 (9) |
1,949 (31,174) |
212,216 (60,214) |
| Net commissions and other income | 77,673 | 47,149 | 124,822 | 39,448 | 13,762 | 3,195 | (29,225) | 152,002 |
| Net gains arising from trading activity | 42,998 | 26,078 | 69,076 | - | 1,446 | - | 120,760 | 191,282 |
| Share of profit of associates under the equity method |
- | (342) | (342) | - | - | - | 6,400 | 6,058 |
| Gains / (losses) arising from the sale | ||||||||
| of subsidiaries and other assets | - | 245 | 245 | - | - | - | (5,190) | (4,945) |
| Net operating revenue | 179,809 | 188,231 | 368,040 | 123,298 | 17,542 | 18,948 | 114,388 | 642,216 |
| Staff costs and administrative costs Depreciations |
122,835 460 |
84,016 6,034 |
206,851 6,494 |
23,861 107 |
10,339 53 |
6,082 6 |
(6,604) 7,137 |
240,529 13,797 |
| Operating costs | 123,295 | 90,050 | 213,345 | 23,968 | 10,392 | 6,088 | 533 | 254,326 |
| Other financial assets impairment (3) | ||||||||
| (17,371) | (21,666) | (39,037) | 88,287 | (754) | (293,708) | 25,210 | (220,002) | |
| Other assets impairment Net (loss) / income |
(48) | 167 | 119 | (66) | (28) | (1,316) | (49,891) | (51,182) |
| before income tax | 39,095 | 76,682 | 115,777 | 187,551 | 6,368 | (282,164) | 89,174 | 116,706 |
| Income tax | (9,720) | (14,704) | (24,424) | (55,253) | (1,331) | 83,238 | (35,046) | (32,816) |
| (Loss) / income after income tax | ||||||||
| from continuing operations | 29,375 | 61,978 | 91,353 | 132,298 | 5,037 | (198,926) | 54,128 | 83,890 |
| (Loss) / income arising from | ||||||||
| discontinued operations (4) | - | 15,897 | 15,897 | - | - | - | 776 | 16,673 |
| Net (loss) / income after income tax | 29,375 | 77,875 | 107,250 | 132,298 | 5,037 | (198,926) | 54,904 | 100,563 |
| Non-controlling interests | - | (34,186) | (34,186) | - | - | - | 4,036 | (30,150) |
| Net (loss) / income after income tax | 29,375 | 43,689 | 73,064 | 132,298 | 5,037 | (198,926) | 58,940 | 70,413 |
| Balance sheet | ||||||||
| Cash and Loans and advances | ||||||||
| to credit institutions | 6,977,616 | 2,238,963 | 9,216,579 | 1,684,477 | 2,688,005 | 3,757 | (8,779,326) | 4,813,492 |
| Loans and advances to customers | 17,566,155 | 13,890,793 | 31,456,948 | 11,674,099 | 496,286 | 10,557,918 | 309,893 | 54,495,144 |
| Financial assets (5) | 252,763 | 3,687,963 | 3,940,726 | - | 11,697 | 580,822 | 8,134,156 | 12,667,401 |
| Other assets | 164,058 | 669,872 | 833,930 | 56,448 | 20,078 | 325,148 | 5,101,842 | 6,337,446 |
| Total Assets | 24,960,592 | 20,487,591 | 45,448,183 | 13,415,024 | 3,216,066 | 11,467,645 | 4,766,565 | 78,313,483 |
| Deposits from other credit | ||||||||
| institutions | 28,500 | 1,932,341 | 1,960,841 | 3,823,044 | 343,837 | 10,723,800 | (5,785,543) | 11,065,979 |
| Deposits from customers | 22,876,424 | 15,457,914 | 38,334,338 | 8,438,366 | 2,574,062 | 257,149 | 1,154,870 | 50,758,785 |
| Debt securities issued | 1,398,936 | 408,834 | 1,807,770 | 9,030 | 134,723 | 3,857 | 3,620,371 | 5,575,751 |
| Other financial liabilities | - | 829,103 | 829,103 | - | 14,930 | - | 2,974,325 | 3,818,358 |
| Other liabilities | 17,814 | 542,032 | 559,846 | 41,604 | 5,414 | 4,221 | 915,790 | 1,526,875 |
| Total Liabilities | 24,321,674 | 19,170,224 | 43,491,898 | 12,312,044 | 3,072,966 | 10,989,027 | 2,879,813 | 72,745,748 |
| Equity and non-controlling interests | 638,918 | 1,317,367 | 1,956,285 | 1,102,980 | 143,100 | 478,618 | 1,886,752 | 5,567,735 |
| Total Liabilities, Equity and non-controlling interests |
24,960,592 | 20,487,591 | 45,448,183 | 13,415,024 | 3,216,066 | 11,467,645 | 4,766,565 | 78,313,483 |
| Number of employees | 4,829 | 9,670 | 14,499 | 568 | 291 | 183 | 1,888 | 17,429 |
(1) Includes the activity of the subsidiary in Angola, considered as discontinued operation;
(2) Includes the activity of Millennium bcp Gestão de Activos;
(3) Includes the reallocation of impairment from the core portfolio (accounted in the Corporate segment) to the non-core portfolio in the amount of 175 million euros;
(4) The amount considered for Angola in discontinued operations corresponds to the book value. The impact of capital allocation in segments base, is reflected in net interest income item;
(5) Includes financial assets held for trading, other financial assets held for trading at fair value through profit or loss, financial assets held to maturity, financial assets available for sale and hedging derivatives.
Note: As at 31 March 2015, the goodwill disclosed in the financial statements is reflected in Mozambique Euros 3 millions and Euros 173 millions in Other Portugal, as described in note 30.
As at 31 March 2016, the net contribution of the major geographic segments is analysed as follows:
| Portugal | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Retail | Companies, Corporate and Investment |
Private | Portfolio non core |
|||||||
| Banking | Banking | Banking | business | Other (*) | Total | Poland | Mozambique | Other (1) | Consolidated | |
| Income statement Interest income Interest expense |
136,569 (41,822) |
96,340 (26,191) |
7,985 (3,778) |
42,072 (36,275) |
17,952 (15,543) |
300,918 (123,609) |
127,066 (50,605) |
57,166 (19,369) |
1,519 (727) |
486,669 (194,310) |
| Net interest income | 94,747 | 70,149 | 4,207 | 5,797 | 2,409 | 177,309 | 76,461 | 37,797 | 792 | 292,359 |
| Commissions and other income | 97,555 | 41,139 | 7,319 | 2,571 | 289 | 148,873 | 38,613 | 19,564 | 6,872 | 213,922 |
| Commissions and other costs | (3,109) | (1,533) | (174) | (8) | (20,109) | (24,933) | (21,199) | (7,732) | (1,434) | (55,298) |
| Net commissions and other income Net gains arising from |
94,446 | 39,606 | 7,145 | 2,563 | (19,820) | 123,940 | 17,414 | 11,832 | 5,438 | 158,624 |
| trading activity Share of profit of associates under the |
(64) | - | - | 23,893 | (19,127) | 4,702 | 13,995 | 9,264 | 371 | 28,332 |
| equity method Gains / (losses) arising from the sale of subsidiaries and other assets |
- - |
- - |
- - |
- - |
13,874 (5,481) |
13,874 (5,481) |
- 377 |
- 58 |
- - |
13,874 (5,046) |
| Net operating revenue | 189,129 | 109,755 | 11,352 | 32,253 | (28,145) | 314,344 | 108,247 | 58,951 | 6,601 | 488,143 |
| Staff costs and administrative costs |
120,442 | 23,270 | 3,858 | 4,828 | (4,602) | 147,796 | 54,989 | 21,446 | 6,030 | 230,261 |
| Depreciations | 511 | 117 | 2 | 5 | 6,427 | 7,062 | 3,074 | 2,629 | 50 | 12,815 |
| Operating costs | 120,953 | 23,387 | 3,860 | 4,833 | 1,825 | 154,858 | 58,063 | 24,075 | 6,080 | 243,076 |
| Other financial assets impairment Other assets impairment |
(33,386) - |
(51,301) 32 |
(690) - |
(32,328) 372 |
(40,490) (105) |
(158,195) 299 |
(10,109) (238) |
(8,555) 827 |
(39) - |
(176,898) 888 |
| Net (loss) / income before | ||||||||||
| income tax | 34,790 | 35,099 | 6,802 | (4,536) | (70,565) | 1,590 | 39,837 | 27,148 | 482 | 69,057 |
| Income tax | (10,266) | (10,289) | (2,007) | 1,338 | 25,891 | 4,667 | (11,511) | (7,896) | (258) | (14,998) |
| (Loss) / income after income tax from continuing operations |
24,524 | 24,810 | 4,795 | (3,198) | (44,674) | 6,257 | 28,326 | 19,252 | 224 | 54,059 |
| (Loss) / income arising from discontinued operations (2) |
- | - | - | - | - | - | - | - | 29,005 | 29,005 |
| Net (loss) / income after income tax |
24,524 | 24,810 | 4,795 | (3,198) | (44,674) | 6,257 | 28,326 | 19,252 | 29,229 | 83,064 |
| Non-controlling interests | - | - | - | - | (1,254) | (1,254) | (14,134) | (6,587) | (14,411) | (36,386) |
| Net (loss) / income after income tax |
24,524 | 24,810 | 4,795 | (3,198) | (45,928) | 5,003 | 14,192 | 12,665 | 14,818 | 46,678 |
| Balance sheet Cash and Loans and advances to |
||||||||||
| credit institutions Loans and advances to |
9,433,857 | 1,364,472 | 1,634,312 | 4,372 | (10,893,579) | 1,543,434 | 977,137 | 341,773 | 1,388,354 | 4,250,698 |
| customers | 17,166,401 | 11,114,080 | 184,025 | 9,297,198 | 417,428 | 38,179,132 | 10,824,826 | 1,143,362 | 1,035,678 | 51,182,998 |
| Financial assets (3) | 20,320 | - | - | 598,368 | 9,250,912 | 9,869,600 | 3,292,485 | 409,622 | 650,896 | 14,222,603 |
| Other assets | 163,648 | 47,366 | 10,549 | 568,764 | 5,298,574 | 6,088,901 | 243,416 | 133,811 | 172,836 | 6,638,964 |
| Total Assets | 26,784,226 | 12,525,918 | 1,828,886 | 10,468,702 | 4,073,335 | 55,681,067 | 15,337,864 | 2,028,568 | 3,247,764 | 76,295,263 |
| Deposits from other credit institutions Deposits from customers |
1,422,480 24,173,173 |
4,048,162 7,651,470 |
- 1,748,243 |
9,738,260 288,429 |
(6,310,785) 1,049,112 |
8,898,117 34,910,427 |
1,381,997 12,214,429 |
163,706 1,466,625 |
370,088 2,422,941 |
10,813,908 51,014,422 |
| Debt securities issued | 622,630 | 2,657 | 66,037 | 611 | 3,470,817 | 4,162,752 | 300,425 | - | - | 4,463,177 |
| Other financial liabilities | - | - | - | - | 2,478,538 | 2,478,538 | 501,545 | - | 9,444 | 2,989,527 |
| Other liabilities | 32,481 | 38,129 | 300 | 3,936 | 773,748 | 848,594 | 257,453 | 147,264 | 108,645 | 1,361,956 |
| Total Liabilities Equity and non-controlling interests |
26,250,764 533,462 |
11,740,418 785,500 |
1,814,580 14,306 |
10,031,236 437,466 |
1,461,430 2,611,905 |
51,298,428 4,382,639 |
14,655,849 682,015 |
1,777,595 250,973 |
2,911,118 336,646 |
70,642,990 5,652,273 |
| Total Liabilities, Equity and non-controlling |
||||||||||
| interests | 26,784,226 | 12,525,918 | 1,828,886 | 10,468,702 | 4,073,335 | 55,681,067 | 15,337,864 | 2,028,568 | 3,247,764 | 76,295,263 |
| Number of employees | 4,952 | 584 | 184 | 155 | 1,561 | 7,436 | 5,877 | 2,499 | 1,297 | 17,109 |
(1) Includes the activity of the subsidiary in Angola, considered as discontinued operation;
(2) The amount considered for Angola in discontinued operations correspondsto the book value. The impact of capital allocation in segments base, is reflected in net interest income item;
(3) Includes financial assets held for trading, other financial assets held for trading at fair value through profit or loss, financial assets held to maturity, financial assets available for sale and hedging derivatives.
Note: As at 31 March 2016, the goodwill disclosed in the financial statements is reflected in Mozambique Euros 2 millions and Euros 174 millions in Other Portugal, as described in note 30.
As at 31 March 2015, the net contribution of the major geographic segments is analysed as follows:
| Portugal | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Retail Banking |
Companies, Corporate and Investment Banking |
Private Banking |
Portfolio non core business |
Other (1) | Total | Poland | Mozambique | Other (2) | Consolidated | |
| Income statement | ||||||||||
| Interest income Interest expense |
139,056 (79,918) |
115,784 (31,934) |
8,142 (7,828) |
57,519 (41,766) |
41,734 (20,091) |
362,235 (181,537) |
139,835 (62,762) |
59,843 (21,286) |
5,551 (4,060) |
567,464 (269,645) |
| Net interest income | 59,138 | 83,850 | 314 | 15,753 | 21,643 | 180,698 | 77,073 | 38,557 | 1,491 | 297,819 |
| Commissions and other costs | 80,900 | 41,802 | 8,215 | 3,204 | 1,949 | 136,070 | 43,832 | 24,774 | 7,540 | 212,216 |
| Commissions and other costs | (3,227) | (2,354) | (468) | (9) | (31,174) | (37,232) | (12,103) | (9,355) | (1,524) | (60,214) |
| Net commissions and other income |
77,673 | 39,448 | 7,747 | 3,195 | (29,225) | 98,838 | 31,729 | 15,419 | 6,016 | 152,002 |
| Net gains arising from trading activity |
42,998 | - | - | - | 120,760 | 163,758 | 14,728 | 11,349 | 1,447 | 191,282 |
| Share of profit of associates under the equity method Gains / (losses) arising from the sale of subsidiaries |
- | - | - | - | 6,400 | 6,400 | (342) | - | - | 6,058 |
| and other assets | - | - | - | - | (5,190) | (5,190) | 137 | 108 | - | (4,945) |
| Net operating revenue Staff costs and administrative costs |
179,809 122,835 |
123,298 23,861 |
8,061 4,286 |
18,948 6,082 |
114,388 (6,604) |
444,504 150,460 |
123,325 58,657 |
65,433 25,359 |
8,954 6,053 |
642,216 240,529 |
| Depreciations | 460 | 107 | 1 | 6 | 7,137 | 7,711 | 2,858 | 3,176 | 52 | 13,797 |
| Operating costs Other financial |
123,295 | 23,968 | 4,287 | 6,088 | 533 | 158,171 | 61,515 | 28,535 | 6,105 | 254,326 |
| assets impairment (3) | (17,371) | 88,287 | (727) | (293,708) | 25,210 | (198,309) | (16,521) | (5,145) | (27) | (220,002) |
| Other assets impairment | (48) | (66) | - | (1,316) | (49,891) | (51,321) | 248 | (81) | (28) | (51,182) |
| Net (loss) / income before | ||||||||||
| income tax | 39,095 | 187,551 | 3,047 | (282,164) | 89,174 | 36,703 | 45,537 | 31,672 | 2,794 | 116,706 |
| Income tax | (9,720) | (55,253) | (900) | 83,238 | (35,046) | (17,681) | (8,874) | (5,988) | (273) | (32,816) |
| (Loss) / income after income tax from continuing operations |
29,375 | 132,298 | 2,147 | (198,926) | 54,128 | 19,022 | 36,663 | 25,684 | 2,521 | 83,890 |
| (Loss) / income arising from | ||||||||||
| discontinued operations (4) | - | - | - | - | 776 | 776 | - | - | 15,897 | 16,673 |
| Net (loss) / income after income tax |
29,375 | 132,298 | 2,147 | (198,926) | 54,904 | 19,798 | 36,663 | 25,684 | 18,418 | 100,563 |
| Non-controlling interests | - | - | - | - | 4,036 | 4,036 | (18,295) | (8,552) | (7,339) | (30,150) |
| Net (loss) / income after income tax |
29,375 | 132,298 | 2,147 | (198,926) | 58,940 | 23,834 | 18,368 | 17,132 | 11,079 | 70,413 |
| Balance sheet Cash and Loans and |
||||||||||
| advances to credit institutions Loans and advances |
6,977,616 | 1,684,477 | 1,454,861 | 3,757 | (8,779,326) | 1,341,385 | 1,467,232 | 365,803 | 1,639,072 | 4,813,492 |
| to customers | 17,566,155 | 11,674,099 | 251,320 | 10,557,918 | 309,893 | 40,359,385 | 11,383,414 | 1,468,378 | 1,283,967 | 54,495,144 |
| Financial assets (5) | 252,763 | - | 50 | 580,822 | 8,134,156 | 8,967,791 | 2,597,362 | 572,004 | 530,244 | 12,667,401 |
| Other assets | 164,058 | 56,448 | 10,432 | 325,148 | 5,101,842 | 5,657,928 | 230,805 | 198,637 | 250,076 | 6,337,446 |
| Total Assets | 24,960,592 | 13,415,024 | 1,716,663 | 11,467,645 | 4,766,565 | 56,326,489 | 15,678,813 | 2,604,822 | 3,703,359 | 78,313,483 |
| Deposits from other | ||||||||||
| credit institutions Deposits from customers |
28,500 22,876,424 |
3,823,044 8,438,366 |
321 1,566,464 |
10,723,800 257,149 |
(5,785,543) 1,154,870 |
8,790,122 34,293,273 |
1,390,455 12,004,520 |
199,710 1,906,833 |
685,692 2,554,159 |
11,065,979 50,758,785 |
| Debt securities issued | 1,398,936 | 9,030 | 134,723 | 3,857 | 3,620,371 | 5,166,917 | 382,722 | 26,112 | - | 5,575,751 |
| Other financial liabilities | - | - | - | - | 2,974,325 | 2,974,325 | 829,103 | - | 14,930 | 3,818,358 |
| Other liabilities | 17,814 | 41,604 | 567 | 4,221 | 915,790 | 979,996 | 322,022 | 165,863 | 58,994 | 1,526,875 |
| Total Liabilities | 24,321,674 | 12,312,044 | 1,702,075 | 10,989,027 | 2,879,813 | 52,204,633 | 14,928,822 | 2,298,518 | 3,313,775 | 72,745,748 |
| Equity and non-controlling interests |
638,918 | 1,102,980 | 14,588 | 478,618 | 1,886,752 | 4,121,856 | 749,991 | 306,304 | 389,584 | 5,567,735 |
| Total Liabilities, Equity and non-controlling |
||||||||||
| interests | 24,960,592 | 13,415,024 | 1,716,663 | 11,467,645 | 4,766,565 | 56,326,489 | 15,678,813 | 2,604,822 | 3,703,359 | 78,313,483 |
| Number of employees | 4,829 | 568 | 208 | 183 | 1,888 | 7,676 | 6,000 | 2,496 | 1,257 | 17,429 |
(1) Includes the activity of the subsidiary in Angola, considered as discontinued operation;
(2) Includes the activity of Millennium bcp Gestão de Activos;
(3) Includes the reallocation of impairment from the core portfolio (accounted in the Corporate segment) to the non-core portfolio in the amount of 175 million euros;
(4) The amount considered for Angola in discontinued operations correspondsto the book value. The impact of capital allocation in segments base, is reflected in net interest income item;
(5) Includes financial assets held for trading, other financial assets held for trading at fair value through profit or loss, financial assets held to maturity, financial assets available for sale and hedging derivatives.
Note: As at 31 March 2015, the goodwill disclosed in the financial statements is reflected in Mozambique Euros 3 millions and Euros 173 millions in Other Portugal, as described in note 30.
Description of the relevant items of reconciliation:
| Mar 2016 | Mar 2015 | |
|---|---|---|
| Euros '000 | Euros '000 | |
| Net contribution: | ||
| Retail Banking in Portugal | 24,524 | 29,375 |
| Companies, Corporate and Investment Banking | 24,810 | 132,298 |
| Private Banking | 4,795 | 2,147 |
| Portfolio non core business | (3,198) | (198,926) |
| Foreign Business (continuing operations) | 47,802 | 64,868 |
| Non-controlling interests (1) | (36,386) | (30,150) |
| 62,347 | (388) | |
| Income / (Loss) from discontinued operations (2) | 29,005 | 16,673 |
| 91,352 | 16,285 | |
| Amounts not allocated to segments: | ||
| Interests of hybrid instruments | (16,401) | (15,713) |
| Net interest income of the bond portfolio | 6,890 | 30,290 |
| Interests written off | (1,231) | (14,186) |
| Own Credit Risk | (829) | (8,721) |
| Impact of exchange rate hedging of investments | 125 | (11,685) |
| Equity accounted earnings | 13,874 | 6,400 |
| Impairment and other provisions (3) | (40,596) | (24,680) |
| Operational costs | (1,826) | (533) |
| Gains on sale of public debt (4) | (3,740) | 166,344 |
| Others (5) | (940) | (73,388) |
| Total not allocated to segments | (44,674) | 54,128 |
| Consolidated net income / (loss) | 46,678 | 70,413 |
(1) Corresponds mainly to the income attributable to third parties related to the subsidiaries in Poland, in Mozambique and in Angola;
(2) Includes the activity of the subsidiary in Angola, considered as discontinued operation;
(3) Includes provisions for property in kind, administrative infractions, various contingencies and other unallocated to business segments.;
(4) Do not include values allocated to business segments;
(5) Includes funding for non interest bearing assets and the financial strategies as well as tax effect associated with the items previously discriminated.
31 March, 2016
As at 31 March 2016 the Group's subsidiary companies included in the consolidated accounts using the full consolidation method were as follows:
| Group | Bank | ||||||
|---|---|---|---|---|---|---|---|
| Head | Share | % | % | % | |||
| Subsidiary companies | office | 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 | – |
| 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 | 50.1 | 50.1 | 50.1 |
| 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 | 90,911,278 | EUR | Investment | 100.0 | 34.1 | – |
| 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 | 50.1 | – |
| Millennium BCP - Escritório de Representações e Serviços, Ltda. |
Sao Paulo | 49,545,986 | 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 | 682,965,800 | EUR | Holding company | 100.0 | 100.0 | 100.0 |
| Bitalpart, B.V. | Amsterdam | 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 | 37.1 | – |
| Enerparcela - Empreendimentos Imobiliários, S.A. Oeiras | 30,850,000 | EUR | Real-estate management | 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. | Oeiras | 10,706,743 | EUR | Real-estate management | 100.0 | 100.0 | – |
| Sadamora - Investimentos Imobiliários, S.A. | Oeiras | 11,337,399 | EUR | Real-estate management | 100.0 | 100.0 | – |
| Millennium bcp - Prestação de Serviços, A. C. E. |
Lisbon | 331,000 | EUR | Services | 93.9 | 93.6 | 83.2 |
| Millennium bcp Teleserviços - Serviços de Comércio Electrónico, S.A. |
Lisbon | 50,004 | EUR | Videotext services | 100.0 | 100.0 | 100.0 |
| Group | Bank | ||||||
|---|---|---|---|---|---|---|---|
| Head | Share | % | % | % | |||
| Subsidiary companies | office | capital | Currency | Activity | control | held | held |
| Millennium Dom Maklerski, S.A. | Warsaw | 16,500,000 | PLN | Brokerage services | 100.0 | 50.1 | – |
| Millennium Leasing, Sp.z o.o. | Warsaw | 48,195,000 | PLN | Leasing | 100.0 | 50.1 | – |
| Millennium Service, Sp.z o.o. | Warsaw | 1,000,000 | PLN | Services | 100.0 | 50.1 | – |
| Millennium Telecomunication, Sp.z o.o. | Warsaw | 100,000 | PLN | Brokerage services | 100.0 | 50.1 | – |
| Millennium TFI - Towarzystwo Funduszy Inwestycyjnych, S.A. |
Warsaw | 10,300,000 | PLN | Investment fund management | 100.0 | 50.1 | – |
| MBCP REO I, LLC | Delaware | 1,489,835 | USD | Real-estate management | 100.0 | 100.0 | – |
| MBCP REO II, LLC | Delaware | 2,747,869 | 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 |
Lisboa | 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 | 50.1 | – |
| Irgossai - Urbanização e construção, S.A. (*) | Oeiras | 50,000 | EUR | Construction and sale of real estate projects |
100.0 | 100.0 | 100.0 |
| Imábida - Imobiliária da Arrábida, S.A. (*) | Oeiras | 1,750,000 | EUR | Real-estate management | 100.0 | 100.0 | 100.0 |
(*) - Companies classified as non-current assets held for sale
As at 31 March 2016 the BCP Group's subsidiary insurance companies included in the consolidated accounts under the full consolidation method were as follows:
| Group | Bank | |||||||
|---|---|---|---|---|---|---|---|---|
| Subsidiary companies | Head office |
Share 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 Moçambique, S.A.R.L. |
Maputo | 147,500,000 | MZN | Insurance | 89.9 | 60.0 | – |
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", "Grand Urban Investment Fund - Fundo Especial de Investimento Imobiliário Fechado", "Fundial – Fundo Especial de Investimento Imobiliário Fechado","DP Invest – Fundo Especial de Investimento Imobiliário Fechado" and "Fundipar – Fundo Especial de Investimento Imobiliário Fechado".
As at 31 March 2016 the Group's associated companies included in the consolidated accounts under the equity method were as follows:
| Associated companies | Head office |
Share capital |
Currency | Activity | Group | Bank | |
|---|---|---|---|---|---|---|---|
| % control |
% held |
% held |
|||||
| Banque BCP, S.A.S. | Paris | 108,941,724 | EUR | Banking | 19.9 | 19.9 | 19.9 |
| Banque BCP, S.A. (**) | Luxembourg | 22,250,000 | EUR | Banking | 7.3 | 7.3 | – |
| 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 | 100,000,196 | USD | Services | 10.0 | 10.0 | – |
| Beiranave Estaleiros Navais Beira SARL | 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 | – |
| Lubuskie Fabryki Mebli, S.A. | Swiebodzin | 13,400,050 | PLN | Furniture manufacturer | 50.0 | 25.1 | – |
| 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 | 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 |
(**) Given the nature of the Group's involvement, the Board of Directors believes that the Group maintains a significant influence on these companies.
As at 31 March 2016 the Group's associated insurance companies included in the consolidated accounts under the equity method were as follows:
| Group | Bank | ||||||
|---|---|---|---|---|---|---|---|
| Associated companies | Head office |
Share capital |
Currency | Activity | % 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 | – |
| Ocidental - Sociedade Gestora de Fundos de Pensões, S.A. |
Oeiras | 1,200,000 | EUR | Pension fund management | 49.0 | 49.0 | – |
The Group held a set of securitization transactions regarding mortgage 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.
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