64664c4a-05be-4a14-9392-49cb09a53c70.pdf


1 February 2016

Millennium bcp earnings release as at 31 December 2015


Profitability and efficiency

Back to profits


Business performance

Healthy balance sheet


Asset quality

Lower delinquency and reinforced coverage


Capital and liquidity

Reinforced to European benchmarks levels

  • Net profit of Euro 235 million in 2015, compared to a loss of Euro 227 million in 2014.

  • Core net income* up 37.1%, from Euro 647.4 million in 2014 to Euro

887.9 million in 2015, reflecting a 16.6% increase in net interest income and lower operating costs (-3.7%, including an 7.0% reduction in Portugal). Operating efficiency improved further, as cost to core income* decreased to 55.5%.


  • Customer deposits up by 3.5% to Euro 51.5 billion as at 31 December 2015, with total customers funds standing at Euro 66.2 billion (Euro 64.7 billion as at 31 December 2014).

  • Commercial gap improved further, with net loans as a percentage of on- balance sheet customer funds now standing at 97%. As a percentage of deposits (BoP criteria), net loans improved to 102% (108% as at 31 December 2014).

  • Provision charges still sizable, but trending downwards: Euro 833.0 million in 2015 (Euro 1,107.0 million in 2014).

  • Decrease of the non-performing loans ratio to 10.9% at year-end 2015 from 11.5% at year-end 2014. Coverage of non-performing loans reinforced to 57.3% from 52.9% at the end of 2014.

  • Common equity tier 1 ratio** at 13.3% according to phased-in criteria, compared to 11.7% as at 31 December 2014. This figure stood at 10.2% on a fully implemented basis.

  • Capital figures do not include the impact of the agreement to merge Millennium Angola and Banco Privado Atlântico, S.A., estimated at +0.4 percentage points in phased-in.

  • ECB funding usage at Euro 5.3 billion (Euro 1.5 billion of which TLTRO- related), down from Euro 6.6 billion as at 31 December 31 2014.





* Core income = net interest income + net fees and commission income; Core net income = core income - operating costs.

** Includes the impact of the new DTAs regime for capital purposes according with IAS.


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BANCO COMERCIAL PORTUGUÊS, S.A.,

a public company (sociedade aberta)

having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto,

with the single commercial and tax identification number 501 525 882

and the share capital of EUR 4,094,235,361.88

INVESTOR RELATIONS

Rui Coimbra

Phone +351 211 131 084

investors@millenniumbcp.pt rui.coimbrafernandes@millenniumbcp.pt lmonteiro@millenniumbcp.pt

MEDIA CONTACT

Erik T. Burns

Phone +351 211 131 242

Mobile +351 917 265 020

erik.burns@millenniumbcp.pt cintia.barbas@millenniumbcp.pt


Financial Highlights Euro million

31 Dec. 15

31 Dec. 14

Change 15 / 14

Balance sheet

Total assets

74,885

76,361

-1.9%

Loans to customers (gross)

55,438

57,168

-3.0%

Total customer funds (1)

66,176

64,739

2.2%

Balance sheet customer funds

53,850

52,593

2.4%

Customer deposits

51,539

49,817

3.5%

Loans to customers, net / Customer deposits (2)

102%

108%

Loans to customers, net / Balance sheet customer funds

97%

102%

Results

Net income

235.3

(226.6)

Net interest income

1,301.6

1,116.2

16.6%

Net operating revenues

2,503.5

2,292.5

9.2%

Operating costs

1,106.5

1,149.6

-3.7%

Loan impairment charges (net of recoveries)

833.0

1,107.0

-24.7%

Other impairment and provisions

161.3

209.3

-22.9%

Income taxes

Current

99.7

101.0

Deferred

(43.3)

(198.7)

Profitability

Net operating revenues / Average net assets (2)

3.2%

2.8%

Return on average assets (ROA) (3)

0.5%

-0.1%

Income before tax and non-controlling interests / Average net assets (2)

0.5%

-0.3%

Return on average equity (ROE)

5.3%

-6.5%

Income before tax and non-controlling interests / Average equity (2)

7.7%

-5.1%

Credit quality

Overdue loans and doubtful loans / Total loans (2)

9.4%

9.6%

Overdue loans and doubtful loans, net / Total loans, net (2)

3.4%

3.8%

Credit at risk / Total loans (2)

11.3%

12.0%

Credit at risk, net / Total loans, net (2)

5.4%

6.3%

Impairment for loan losses / Overdue loans by more than 90 days

86.7%

83.1%

Efficiency ratios (2)(4)

Operating costs / Net operating revenues

44.0%

51.7%

Operating costs / Net operating revenues (Portugal)

41.1%

53.7%

Staff costs / Net operating revenues

24.4%

28.6%

Capital (5)(6)

Common equity tier I phased-in)

13.3%

11.7%

Common equity tier I fully implemented

10.2%

7.8%

Branches

Portugal activity

671

695

-3.5%

Foreign activity

671

678

-1.0%

Employees

Portugal activity

7,459

7,795

-4.3%

Foreign activity

9,724

9,845

-1.2%

(1) Adjusted, in December 2014, from the effect related to the classification of Millennium bcp Gestão de Activos as discontinued operations.

(2) According to Instruction from the Bank of Portugal no. 16/2004, as the currently existing version.

(3) Considering net income before non-controlling interests.

(4) Excludes the impact of specific items: gains from the sale of the shareholdings associated with non-life insurance business (Euro 69.4 million in 2014) and restructuring costs and other (Euro 5.8 million in 2015).

(5) According with CRD IV/CRR.

(6) Includes the impact of the new DTAs regime for capital purposes according with IAS.



RESULTS AND ACTIVITY IN 2015

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 were 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 December 2014. 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.


RESULTS

The net income of Millennium bcp amounted to Euro 235.3 million in 2015, showing a favourable evolution compared to a net loss of Euro 226.6 million recorded in 2014, reflecting the pursuit of the objectives set out in the Strategic Plan, supported by the recovery of profitability in Portugal and the development of the international activity.

Net income in 2015 was determined by the lower level of impairment losses and provisions charges, together with the positive performance of net interest income and net trading income, in spite of the fourth quarter of 2015, which was penalised by the booking of extraordinary contributions in the amount of Euro 28.3 million in Bank Millennium in Poland related with the bankruptcy of a bank and the contribution for the Mortgage Loans Restructuring Fund, and Euro 31.4 million associated with the Single Resolution Fund in the activity in Portugal.

In the activity in Portugal, net income reached Euro 44.2 million, an improvement of Euro 431.5 million from the amount posted in 2014, supported by the lower level of impairment losses and provisions charges and the 14.3% increase of banking income that benefited from net interest income performance.

Net income in the international activity, excluding the impacts of discontinued operations and the increase of non-controlling interests related with the sale of 15.4% of the shareholding of the subsidiary Bank Millennium in Poland in the first quarter of 2015, decreased 3.7% compared with 2014, influenced by the contribution of the subsidiary in Poland that was conditioned by the above-referred extraordinary impacts.

Net interest income stood at Euro 1,301.6 million in 2015, an increase of 16.6% over the Euro 1,116.2 million registered in 2014, mainly boosted by the positive performance of the activity in Portugal.

Net interest income in Portugal amounted to Euro 711.3 million in 2015, compared to Euro 527.0 million in 2014, driven by the sustained reduction of term deposits costs, materialised in a 73 basis points decrease in 2015, together with a lower cost related to CoCos, induced by the early repayment made during 2014 in the amount of Euro 2,250 million.

In the international activity, net interest income, excluding exchange rate impact, increased by 1.2% in 2015, totalling Euro 595.9 million, on the back of the improvement of loans to customers and deposits volume registered in the operations in Angola and Mozambique.

Net interest margin in 2015 stood at 1.91%, compared with 1.56% in 2014. Excluding the cost of CoCos impact, net interest margin reached 2.01% in 2015 and 1.81% in 2014.


AVERAGE BALANCES

Euro million

31 Dec.15

31 Dec.14

Amount Yie

ld %

Amount

Yield %

Deposits in banks

3,284

0.82

3,254

1.17

Financial assets

10,659

2.75

12,236

3.41

Loans and advances to customers

53,251

3.62

55,068

3.81

Interest earning assets

67,194

3.34

70,558

3.62

Discontinued operations (1)

107

398

Non-interest earning assets

9,827

9,580

77,128

80,536


Amounts owed to credit institutions


10,797


0.66


12,217


0.67

Amounts owed to customers

50,510

1.16

48,715

1.65

Debt issued

5,318

3.47

8,550

3.79

Subordinated debt

1,837

6.71

3,335

7.23

Interest bearing liabilities

68,462

1.41

72,817

1.99

Discontinued operations (1)

1

323

Non-interest bearing liabilities

3,111

3,027

Shareholders' equity and non-controlling interests


5,554


4,369

77,128

80,536

Net interest margin

1.91

1.56

Net interest margin (excl. cost of CoCos)

2.01

1.81

Note: Interest related to hedge derivatives were allocated, in December 2015 and 2014, to the respective balance sheet item.

(1) Includes the activity of the subsidiaries in Romania (in 2014) and of Millennium bcp Gestão de Ativos, as well as the respective consolidation adjustments.


Net commissions amounted to Euro 692.9 million in 2015, a 1.8% year-on-year increase, boosted by the activity in Portugal that increased 3.5%.

The performance of net commissions in 2015 reflects the 3.2% increase in commissions related to the banking business, induced by higher credit and guarantees-related commissions, both in Portugal and in the international activity, as well as the favourable effect associated with the decreased cost of the guarantee by the Portuguese State to debt securities issued, in spite of the decrease in cards and transfers-related commissions, penalised by the reduction of interchange fees in Poland. The commissions associated with financial markets decreased 4.0%, influenced by the lower level of securities transactions.

Net trading income reached Euro 595.4 million in 2015, from the Euro 442.2 million registered in 2014, driven by the gains related with Portuguese sovereign debt securities in Portugal and the higher foreign exchange results in Angola and Mozambique. Other net operating income was negative by Euro 121.8 million in 2015, compared to Euro 11.4 million accounted in 2014, influenced by the booking of a Euro 69.4 million gain, in 2014, related to the disposal of the shareholding in subsidiaries that operated in the area of non-life insurance.

The activity in Portugal includes the costs related to the contributions for the banking sector, for the Deposit Guarantee Fund and for the Single Resolution Fund, for which a Euro 31.4 million contribution was made in the fourth quarter of 2015.

The international activity reflects the booking of the extraordinary contribution for the Deposit Guarantee Fund of Euro 24.6 million due to the bankruptcy of a Polish bank and Euro 3.7 million for the Mortgage Restructuring Fund in Poland.

Banco Comercial Português SA issued this content on 01 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 01 February 2016 18:12:04 UTC

Original Document: http://ind.millenniumbcp.pt/pt/Institucional/investidores/Documents/ApresentacaoResultados/2015/EarningsMillenniumbcp_4Q15.pdf